How is AR% typically calculated?

The calculation of Accounts Receivable (AR) percentage is typically based on analyzing overdue accounts at specific intervals, which is represented in the correct answer. By assessing AR at intervals of 30, 60, and 90 days, a business can gain insights into the aging of its receivables. This method helps in monitoring how efficiently the company is managing its collections and identifying trends over time.

Each interval provides valuable data points that can indicate potential issues with payment timelines and assist in evaluating the overall financial health of the business. When collecting data in this structured manner, it becomes easier to implement appropriate credit management strategies, ultimately leading to improved cash flow and lower delinquency rates in accounts receivable.

Other options do not align with the common practices for calculating AR%. Calculating AR% based on current potential sales doesn’t provide insights about outstanding debts. Including all overdue accounts without breaking them into time intervals might not give an accurate view of financial trends. Focusing solely on accounts older than 30 days omits important information from more recent debts that could also be affecting cash flow.