How the calculation works
CEI = (beginning receivables + credit sales − ending receivables) ÷ (beginning receivables + credit sales − ending current receivables) × 100.
A worked example
Beginning 10,000 + sales 20,000 − ending 8,000 gives 22,000 collected. With 5,000 ending current receivables, CEI is 22,000 ÷ 25,000 = 88%.
Use the result carefully
Use consistent balances and account for adjustments before interpreting the result. Ending current receivables must be part of ending total receivables.