A company must have a days' sales uncollected ratio of less than 30 days to conclude that is has sufficient liquidity.
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The Days’ Sales Uncollected also known as average collection period is one of the liquidity ratios that is measured to estimate the number of days before receivables will be collected. The ratio is used by creditors and investors widely to determine the short-term liquidity of the company. In terms of individual, the days’ sales uncollected ratio formula measures how long it will take for the customers to pay their credit card balances.
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