Accounts Receivable Days Ratio, often referred to as the “AR Days,” is a key performance indicator that measures how quickly companies collect cash from customers. It’s calculated by dividing total accounts receivable (amounts due from customers) by average daily sales for a given period of time. A higher AR days ratio indicates that it’s taking longer for companies to collect cash, which can lead to cash flow problems and decreased profits. Knowing this metric is essential for any business – it helps you track how efficiently you are collecting payments and make necessary changes early on to keep your finances healthy.