Average collection period refers to the length of time it takes a business to collect receivables.
Companies calculate the average collection period to make sure they have enough cash to meet their financial obligations.
The average collection period is determined by dividing the average AR balance by the total amount of net sales on credit and multiplying this figure by the number of days in the period.
This period testifies to the effectiveness of the company’s AR management methods.
A low average collection period indicates that the organization is collecting payments faster.
Accountability is the acceptance of responsibility for one’s actions. This implies a willingness to be transparent, allowing others to observe and evaluate their work.
Accounting policies are the procedures a company uses to prepare financial statements. Unlike accounting principles, which are rules, accounting policies are the standard for following those rules.
Acquisition accounting is a set of formal guidelines describing how the acquirer should report the assets, liabilities, non-controlling interests and goodwill of the acquired company.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.