Average net receivables

Average net receivables is the multi-period average of accounts receivable ending balances, netted against the average allowance for doubtful accounts for the same periods. The formula is:

(Net receivables for current period + Net receivables for preceding period) / 2

The concept is used in a number of liquidity ratios, and is intended to smooth out any unusual spikes or drops in the ending receivables balance in the current period.

Related Courses

Business Ratios Guidebook 
The Interpretation of Financial Statements