What term describes the number of days' worth of revenue that is accounts receivable?

The term that describes the number of days' worth of revenue that is accounts receivable is known as the Collection Period. This metric is crucial for understanding how effectively a business manages its receivables and collects payments from customers. It indicates the average amount of time it takes for a company to convert its accounts receivable into cash.

A shorter Collection Period typically reflects efficient credit policies and effective collection efforts, while a longer period may suggest challenges in collecting payments on time. Understanding the Collection Period helps businesses assess their cash flow and operational efficiency, which is essential for maintaining financial health and liquidity.

Other terms, such as the Revenue Cycle, refer to the complete process from the creation of a sales order to the eventual receipt of payment, but do not specifically quantify the time related to accounts receivable. Financial Assessment is a broader term that involves evaluating overall financial health, while Accounts Payable deals with money that the business owes to its suppliers and is not relevant to accounts receivable.