The average collection period is calculated by dividing total sales by accounts receivable.It is an effective measure for internal use in monitoring a firm's collections.

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The average collection period is calculated by dividing accounts receivable by average daily credit sales, not total sales. Additionally, while it is a useful measure for monitoring collections, it is typically used externally by lenders or investors to assess a company's liquidity and creditworthiness.

The Average Collection Period Is Calculated by Dividing Total Sales