Collection Ratio

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August 25, 2024 3 min read Definitions

Collection Ratio: Understanding Accounts Receivable Efficiency

Finance Accounting Collection Ratio Accounts Receivable Cash Flow Management Finance Metrics Credit Policy

The Collection Ratio, also known as the average collection period, measures how efficient a company is at converting its accounts receivable into cash. This metric is essential for managing cash flow and assessing the effectiveness of credit policies.

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