The Days Receivable Ratio is a business metric that measures the average number of days a company takes to collect payments from customers. Knowing this ratio helps businesses understand how quickly money is being collected, and whether current processes need to be adjusted in order to speed up collection. It is calculated by dividing the total value of accounts receivable, by the sum of sales within a given period of time and multiplying it by the number of days in the period. By monitoring this important financial ratio, businesses can ensure that their cash flow is healthy and their accounts receivable turnover ratio remains low.