Corporate Finance

canipungoel
Good Student
Posts: 27
Joined: Mon Feb 23, 2015 3:38 am

Corporate Finance

Postby canipungoel » Mon Feb 23, 2015 3:41 am

What is difference between "Weighted Average collection period" and "Average days of receivables"?

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Corporate Finance

Postby edupristine » Mon Feb 23, 2015 9:47 am

Hi, average days of receivables tells you of how many receivables you have. Whereas, weighted average collection period explains for how long receivables have been outstanding. For example you have small receivables in current year (2014) than had in previous year (2013) but the receivables in 2014 have been outstanding for longer than than the receivables in 2013. If revenues are constant, average days receivables will decrease while weighted average collection period will increase.

canipungoel
Good Student
Posts: 27
Joined: Mon Feb 23, 2015 3:38 am

Postby canipungoel » Mon Feb 23, 2015 1:26 pm

Please let me know - Is average days of receivables represents itself in either DAYS or in ABSOLUTE AMOUNT of receivables outstanding?

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Corporate Finance

Postby edupristine » Wed Feb 25, 2015 5:46 am

Hi, average days of receivables is represented in days.


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