Days in Sales Receivables Formula is a vital metric used to measure businesses’ financial success. It is calculated by dividing the total amount of sales you have recorded during a certain period, by the average amount of your accounts receivable during that same period. This figure helps determine how long it takes for businesses to collect their cash from customers and is an important indicator of firms’ ability to remain profitable. This data is also helpful in determining when cash flow may become an issue for businesses, allowing for proactive interventions. With this useful information at their disposal, managers can take steps to ensure their companies continue to thrive.