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
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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