Average accounts receivable

It is the average amount of debtors or accounts receivable in a financial period. The average might be calculated by adding opening and ending balances of accounts receivable and then dividing by 2 or it might be calculated by taking the balance of different points of time ( e.g. 12 months) in a financial period and dividing by total number of point

Formula



Opening balance of debtors a/c + Ending balance of debtor a/c
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                                              2


OR on monthly basis



Debtor account balance at January 31 + Debtor account balance at February 28 + ....+...+....+.........
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                                                         Number of months (say 12)