ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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COLLECTION PERIOD Definition
COLLECTION PERIOD (Period End) is used to appraise accounts receivable (AR).
This ratio measures the length of time it takes to convert your average sales into cash. This measurement defines the relationship between accounts receivable and cash flow. A longer average collection period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying bills. NOTE: Comparing the two COLLECTION PERIOD ratios (Period Average and Period End) suggests the direction in which AR collections are moving, thereby giving an indication as to potential impacts to cash flow.
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CHEQUE see CHECK.
BACKWARDATION is the commission paid by a seller for the postponement of a transaction on a stock exchange when prices for cash delivery are higher than for forward delivery.