The mean maturation period, PMM or simply mean period, is a unit of measurement used in manufacturing and production processes. In these areas, the average maturation period is defined as the time that elapses from when factors of production are acquired through the intervention of monetary units, until these factors are transformed into liquidity, after collecting the sale of the manufactured product. The PMM is expressed in days.
The average maturity period measures the days it takes a company to recover the money invested in the purchase of raw materials. It is used to analyze the dynamic liquidity of a company.
Stages of the Average Ripening Period
The average maturation period is made up of five phases or stages:
Average provisioning period or PMA
Average time that the materials until they are used to make a product.
Average period of manufacture or production or FAQ
It is the average time that the manufacturing or production process of the products requires.
Average sales period or PMV
The average time it takes to sell the manufactured products, that is, the time they remain in storage.
Average collection period for customers or PMC
It is the average time it takes to charge customers, or the time that elapses between the sale and payment for it.
Average period of payment to suppliers or PMP
It is the average time that elapses from when the raw materials are acquired until the payment to thesupplier it is done.
Calculation of the Mean Period of Maturation PMM
The average maturation period is calculated by applying the following formula:
PMM = PMA + PMF + PMV + PMC
If what we want is to calculate the average period of financial maturity, we must include in the formula the average period of payment to suppliers, leaving the formula as follows:
PMMF = PMM - PMP