What Is an Average Collection Period? Average collection period refers to the amount of time it takes for a business to receive payments owed by its clients in terms of accounts receivable (AR). Companies use the average collection period to make sure they have enough cash on hand to meet their financial obligations. The average
What Is the Average Age of Inventory? The average age of inventory is the average number of days it takes for a firm to sell off inventory. It is a metric that analysts use to determine the efficiency of sales. The average age of inventory is also referred to as days’ sales in inventory (DSI).
What Are Average Annual Current Maturities? Average annual current maturities are the average amount of current maturities of long-term debt the company has to pay over the next twelve months. The calculation involves adding up all the current maturities for the year and dividing it by the number of debts. Key Takeaways Average annual current
What Is Average Balance? The average balance is the balance on a loan or deposit account averaged over a given period, usually daily or monthly. The daily or monthly average balance is calculated using multiple closing balances over the selected period of time. A simple average balance between a beginning and ending date is calculated by
What Is Average Collected Balance? The average collected balance is the average balance of collected funds (less any uncleared or uncollected deposits) in a bank account over a specified period, usually one month. The average collected balance is calculated by summing all of the daily collected balances in the period and dividing by the number
What Is the Average Cost Basis Method? The average cost basis method is a system of calculating the value of mutual fund positions held in a taxable account to determine the profit or loss for tax reporting. Cost basis represents the initial value of a security or mutual fund that an investor owns. The average cost
What Is Average Cost Flow Assumption? Average cost flow assumption is a calculation companies use to assign costs to inventory goods, cost of goods sold (COGS), and ending inventory. An average is taken of all of the goods sold from inventory over the accounting period and that average cost is assigned to the goods. Average cost flow
What Is the Average Cost Method? The average cost method assigns a cost to inventory items based on the total cost of goods purchased or produced in a period divided by the total number of items purchased or produced. The average cost method is also known as the weighted-average method. Key Takeaways The average cost
What is the Average Daily Balance Method? The average daily balance is a common accounting method that calculates interest charges by considering the balance invested or owed at the end of each day of the billing period, rather than the balance invested or owed at the end of the week, month, or year. Key Takeaways Interest charges
What Is Average Daily Float? Average daily float refers to the dollar amount of checks or other negotiable instruments that are in the process of collection by a bank, financial institution, or other entity over a certain period, divided by the number of days in the period. When applied to the stock market, it can
