The AR Days Calculation Formula is an important tool used to measure the financial health of a business. Put simply, it’s a way of measuring how quickly customers are paying off their accounts receivable (AR) balances. The formula works by taking the average AR balance over a certain period and dividing it by the total sales during the same period—then multiplying that number by 365 days. This gives you an estimate of how long it will take for businesses to get paid in full. By keeping track of this figure, businesses can stay on top of their cash flow and make better decisions about when and how to manage their accounts receivable.