To calculate the Average Collection Ratio (ACR):
\[ ACR = \left( \frac{TC}{TCh} \right) \times 100 \]
Where:
The average collection ratio is a financial metric used to measure the efficiency of a company’s collection process. It represents the percentage of total charges that have been successfully collected over a specific period. A higher average collection ratio indicates a more efficient collection process, while a lower ratio may suggest issues with billing or collections. This ratio is crucial for businesses to understand their cash flow and financial health.
Let's assume the following values:
Using the formula:
\[ ACR = \left( \frac{80000}{100000} \right) \times 100 = 80\% \]
The Average Collection Ratio is 80%.
Let's assume the following values:
Using the formula:
\[ ACR = \left( \frac{50000}{75000} \right) \times 100 = 66.67\% \]
The Average Collection Ratio is 66.67%.