The number of days that, on average, a company finances its customers, regardless of whether or not commercial paper is discounted. It is calculated by dividing the balance of the customer account plus that of the bills receivable account (or the outstanding discounted bill of exchange account) by the net sales figure, and multiplying it by 365 days. The turnover would be calculated by dividing the sales figure by the balance of customers and bills. Sometimes only the customer balance is used.
« Back to Glossary IndexAverage Collection Period (PMC)
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