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Collection Ratio

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Collection ratio
The ratio of a company's accounts receivable to its average daily sales, which gives the average number of days it takes the company to convert receivables into cash.

Days' Sales Outstanding
In accounting, a company's average collection period. Usually calculated monthly, it indexes the relationship between outstanding accounts receivable and total sales over a given period and is a common tool in measuring liquidity. Tracking trends in days' sales outstanding can also indicate the level of credit risk a company is willing to extend at different points of time. It is also called the collection ratio.


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Gross and Net Collection Ratio Gross collection ratio is the amount paid to the practice divided by the total charges billed.
Our days in A/R have dropped, our collection ratio has increased, and we send bills out within 24 hours after services are rendered.
The financial services department fixed this by scrapping that measure and implementing two new measures, overdues (dollar target) and collection ratio (dollars collected/total dollars due).
 
 
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