Accounts Receivable Turnover Ratio Template

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Accounts Receivable Turnover Ratio Template

This Accounts Receivable Turnover Ratio Template will show you how to calculate receivable turnover ratio and receivable turnover in days.

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What is the Accounts Receivable Turnover Ratio?

The accounts receivable turnover ratio, also known as the debtor’s turnover ratio, is an efficiency ratio that measures how efficiently a company is using its assets. The accounts receivable turnover ratio measures the number of times over a given period that a company collects its average accounts receivable.

Accounts Receivable Turnover Ratio Formula

The accounts receivable turnover ratio formula is as follows:

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

Where:

  • Net credit sales are sales where the cash is collected at a later date. The formula for net credit sales is = Sales on credit – Sales returns – Sales allowances.
  • Average accounts receivable is the sum of starting and ending accounts receivable over a time period (such as monthly or quarterly), divided by 2.

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CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

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