This expresses the average number of days that receivables are outstanding. Generally, the greater number of days outstanding, the greater the probability of delinquencies.
Why it Matters to You
A high number shows that a company is selling its product to customers on credit and waiting a long time to collect the money. This can lead to cash flow problems. A low value means that it takes a company fewer days to collect its accounts receivable. That company is promptly getting the money it needs to create new business.