Q: Why use average receivables?
A: Receivables can spike due to large end-of-period sales. Averaging produces a more representative figure for turnover calculations.
Average Accounts Receivable
CategoryRemaining Metrics
Definition
Average accounts receivable is the simple average of receivables at the beginning and end of the measurement period. It is used as the denominator in receivables turnover.
Formula
Average Receivables = (Receivables current period + Receivables same period 1 year ago) / 2
How GeminIQ calculates this metric
GeminIQ averages current and year-ago receivables from the balance sheet as filed.
FAQ
Q: Is this different from net receivables?
A: GeminIQ uses Accounts Receivable Net, which is after the allowance for doubtful accounts. This is the value reported on the balance sheet and is what would actually be collected.
Q: Why might average receivables differ between platforms?
A: Some platforms use gross receivables (before allowance), others use net. GeminIQ uses net receivables as filed.