Receivables Conversion Period is calculated by dividing the number of days in the reporting period by the accounts receivable turnover ratio. A shorter receivables conversion period is preferable as it indicates faster cash collection for the business. For example, the annual average receivables conversion period is calculated as:
$$Receivables\; Conversion\; Period \mmlToken{mo}[linebreak="auto"]{=} \frac{Average\; Accounts\; Receivable}{Revenue}\times 365\; days$$
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