AVERAGE DUE DATE
AVERAGE
DUE DATE
If
a person owes a number of sums to a person on different dates, he may like to
pay the whole amount on such a day as will involve neither party in loss of
interest. Such a day is known as Average Due Date. It is calculated in the
following way:
(i)
Take
one of the due date as the base date.
(ii)
Calculate
the number of days between the base date and the due date of every transaction.
The base-date is not to be taken into account.
(iii)
Multiply each amount by its respective number of
days as calculated in the second step.
(iv)
Add
the amounts and the products separately.
(v)
Divide
the sum of products by the total of the amounts. This give the number of days
the average due-date is away from the base date.
(vi)
Add the number of days to the base date and thus
arrive at the average due date.
Note :-We can take
any of the due dates as the base date. The products of amount falling due
before that date will then be minus and the products for amounts due after that
will be plus. The difference of the minus and plus totals should be divided by
the total amount and the average due date ascertained accordingly.
Ø If
the minus products are higher, the days thus arrived at should be deducted from
the base date.
Ø If the plus total is higher, the days should be added to the base date.
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#AVERAGEDUEDATE
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