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In accounting the term Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. It enables the enterprise to compare the real collection period with the granted/theoretical credit period.
Credit Sales are all sales made on credit A long debtors collection period is an indication of slow or late payments by debtors.
The multiplier may be changed to 12 or 52 if appropriate.
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