Account Receivable Days Formula, or ARDF, is a simple calculation that helps businesses measure the average amount of time they take to collect payments owed to them. The formula involves calculating the accounts receivable over twelve months and dividing it by the annual sales generated in the same period. This ratio then provides an indication of how long it takes for customers to pay their bills. It also provides a useful insight into the working capital policies that companies use – and can be used to assess their liquidity and identify any potential cash flow problems. By keeping track of this figure, businesses can ensure that their practices are effective and efficient – ultimately leading to improved management and profitability.