How are Accounts Receivable Days calculated?

The Accounts Receivable Days are calculated as follows:  RTC compares the Accounts Receivable balance in the Balance Sheet for the month, to the Revenue balance in the Income Statement for the month.  If the AR balance is equal to the month’s revenue, it calculates it as 30 days.

The amount of AR over the Revenue balance for that month is then compared to prior months Revenue and calculated as a portion of days.

Example:

AR balance as at June $2,000,000
Revenue for June $1,500,000 (30 days)
AR balance remaining $500,000 ($2,000,000-$1,500,000)
Revenue for May $1,600,000 ($500,000/$1,600,000 x 30 days = +9.375 days)

Total AR days are 30 + 9.375 days = 39