Accounts Receivable Turnover

Online Calculators for Business & Investment

Accounts Receivable Turnover

The Accounts Receivable Turnover ratio is very similar in its structure to the inventory turnover ratio, except we interpose accounts receivable in the place of inventory.

The second feature we need to mention is that this ratio is used for internal purposes within an organisation instead of those outside. This is because it is almost impossible to garner the necessary inputs unless you have access to internal reporting. That is, you need to know the level of credit sales made in the period. Therefore unless you know the business’ credit policy and proportion of credit sales to cash sales, then you will be unable to calculate this ratio.

However, if you do have all the required information, what does this ratio tell you? It tells you how times over you turned your accounts receivable (AR) balance into cash. How many times you built up an AR balance, collected the cash & repeat.

A figure of 6.5 (for example) means the business turned their complete AR balance into cash 6.5 times over throughout the period.

Accounts Receivable Turnover Calculator

The calculator asks for:
Credit Sales, which is found through internal reporting.
Accounts Receivable at the Start of Period, which is found on the previous balance sheet.
Accounts Receivable at the End of Period, which is found on the current balance sheet.

Credit Sales ($):

Accounts Receivable
at Start of Period ($):

Accounts Receivable
at End of Period ($):

Accounts Receivable Turnover:

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