What is the formula of average collection period ratio?

Average collection period computed as follows:

Average collection period = (365 days*Average Receivables) / Credit Sales 

or

 Average collection period =365 days / Receivable Turnover

Average receivable period = ( Avg receivable / credit sales )  *365.

The average collection period is also referred to as the days' sales in accounts receivable thus how long it will take to receive the amount due to debtors. It can be computed by this formula

Or      accounts receivable balance          Annual sales ÷365 days

Here is an example. Imagine a firm with accounts receivable on its balance sheet of $8,960 for2008. Credit sales, from the income statement, were $215,600 for2008. Here's the formula:

ACP=$8,960/$215,600/365 =15 days

This means that, on average, customers pay their credit accounts every15 days

Professional Formula

((Opening Balance + Closing Balance)/2) / Total Credit Sales x (No. Of Days)

The formula is:

                                                   Average Accounts Receivable 

                                     =           _______________________

                                                        Sales /365 days