Days Receivable Ratio Calculator

Formula

The formula to calculate the Days Receivable Ratio (DRR) is:

\[ \text{DRR} = \left( \frac{\text{AR}}{\text{ACS}} \right) \times 365 \]

Where:

DRR – The days receivable ratio.
AR – The accounts receivable.
ACS – The annual credit sales.

Definition

Days Receivable Ratio (DRR): Also known as the average collection period, this financial metric measures the average number of days it takes for a company to collect its accounts receivable. This ratio is important for assessing the efficiency of a company’s credit and collection policies. A lower days receivable ratio indicates that the company is collecting its receivables more quickly, which can improve cash flow and reduce the risk of bad debts. Conversely, a higher ratio may indicate that the company is taking longer to collect its receivables, which could be a sign of inefficiency or potential cash flow issues.

Example

Let's say the accounts receivable (AR) is $50,000 and the annual credit sales (ACS) is $300,000. Using the formula:

\[ \text{DRR} = \left( \frac{50,000}{300,000} \right) \times 365 \approx 60.83 \, \text{days} \]

So, the days receivable ratio (DRR) is approximately 60.83 days.

Extended information about "Days-Receivable-Ratio-DRR-Calculator"

Days Receivable Ratio Formula

Definition: The days receivable ratio measures the average number of days it takes a company to collect payment after a sale has been made.

Formula: $ \text{Days Receivable Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Days Receivable Ratio} = \frac{50,000}{200,000} \times 365 $

Accounts Receivable: 50,000
Net Credit Sales: 200,000

Days in Receivable Ratio

Definition: The days in receivable ratio indicates the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Days in Receivable Ratio} = \frac{\text{Accounts Receivable}}{\text{Average Daily Sales}} $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Average Daily Sales} $: Total sales divided by the number of days in the period

Example: $ \text{Days in Receivable Ratio} = \frac{60,000}{1,500} $

Accounts Receivable: 60,000
Average Daily Sales: 1,500

Accounts Receivable Days Ratio Formula

Definition: The accounts receivable days ratio measures the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Accounts Receivable Days Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Accounts Receivable Days Ratio} = \frac{40,000}{160,000} \times 365 $

Accounts Receivable: 40,000
Net Credit Sales: 160,000

Days in Accounts Receivable Ratio

Definition: The days in accounts receivable ratio shows the average number of days it takes to collect receivables.

Formula: $ \text{Days in Accounts Receivable Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Days in Accounts Receivable Ratio} = \frac{70,000}{280,000} \times 365 $

Accounts Receivable: 70,000
Net Credit Sales: 280,000

Days Sales Receivables Ratio

Definition: The days sales receivables ratio measures the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Days Sales Receivables Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Days Sales Receivables Ratio} = \frac{30,000}{120,000} \times 365 $

Accounts Receivable: 30,000
Net Credit Sales: 120,000

Number of Days Sales in Receivables Ratio

Definition: The number of days sales in receivables ratio indicates the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Number of Days Sales in Receivables Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Number of Days Sales in Receivables Ratio} = \frac{45,000}{180,000} \times 365 $

Accounts Receivable: 45,000
Net Credit Sales: 180,000

How to Calculate Debtor Days Ratio

Definition: The debtor days ratio measures the average number of days it takes for a company to collect payment from its debtors.

Formula: $ \text{Debtor Days Ratio} = \frac{\text{Accounts Receivable}}{\text{Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Credit Sales} $: Total credit sales

Example: $ \text{Debtor Days Ratio} = \frac{55,000}{220,000} \times 365 $

Accounts Receivable: 55,000
Credit Sales: 220,000

Days Sales in Accounts Receivable Ratio

Definition: The days sales in accounts receivable ratio measures the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Days Sales in Accounts Receivable Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Days Sales in Accounts Receivable Ratio} = \frac{35,000}{140,000} \times 365 $

Accounts Receivable: 35,000
Net Credit Sales: 140,000

Average Days to Collect Receivables Ratio

Definition: The average days to collect receivables ratio indicates the average number of days it takes for a company to collect its receivables.

Formula: $ \text{Average Days to Collect Receivables Ratio} = \frac{\text{Accounts Receivable}}{\text{Net Credit Sales}} \times 365 $

$ \text{Accounts Receivable} $: Total accounts receivable
$ \text{Net Credit Sales} $: Total credit sales

Example: $ \text{Average Days to Collect Receivables Ratio} = \frac{25,000}{100,000} \times 365 $

Accounts Receivable: 25,000
Net Credit Sales: 100,000

Days Receivable Ratio (DRR) Calculator