Receivables turnover ratio


Receivables turnover ratio

Receivable Turnover Ratio is one of the accounting liquidity ratios, a financial ratio. This ratio measures the number of times, on average, receivables (e.g. Accounts Receivable) are collected during the period. A popular variant of the receivables turnover ratio is to convert it into an Average Collection Period in terms of days. Remember that the Receivable turnover ratio is figured as "turnover times" and the Average collection period is in "days".

ources

* Receivables Turnover Ratio = Net credit sales/ Average net receivables [Weygandt, J. J., Kieso, D. E., & Kell, W. G. (1996). "Accounting Principles" (4th ed.). New York, Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p. 800.]
* Average Collection Period = 365 / Receivables Turnover Ratio [Weygandt, J. J., Kieso, D. E., & Kell, W. G. (1996). "Accounting Principles" (4th ed.). New York, Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc. p. 801.]

References


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