What does average settlement period mean?

average settlement period meaning in Law Dictionary

The time a business takes to cover creditors. This term also applies to debtors. The product sales, days, and creditors are used to fully grasp this quantity.


average settlement period meaning in Business Dictionary

the common time it will require both for a business to cover its lenders or for debtors to cover whatever they owe.Average settlement period for creditors = trade creditors x 365 times / credit purchasesAverage settlement period for debtors = trade debtors x 365 days / credit salesExample: in 2010, a business had $30,000 in trade financial obligation and $60,000 in credit sales.Average settlement duration for debtors = trade debtors x 365 times / credit product sales = $30,000 x 365) / $450,000 = 24.33 days