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Accounts Receivable Turnover

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Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, which is a measure of how quickly customers pay their bills.

Accounts Receivable Turnover
The average amount of time it takes for a business to collect on its accounts receivable. This is calculated by multiplying the amount in accounts receivable by the number of days in a given period and dividing into the total amount of credit sales. Accounts receivable turnover is a way to determine how a business' credit risk compares to that of its competitors.

accounts receivable turnover
The number of times in each accounting period that a firm converts credit sales into cash. A high turnover indicates effective granting of credit and collection from customers by the firm's management. Accounts receivable turnover is calculated by dividing the average amount of receivables into annual credit sales. Also called receivables turnover. See also activity ratio, collection period.


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Accounts Receivable Turnover Ratio (ART) is an accounting measure used to quantify your company's effectiveness in extending credit, as well as, collecting its debts.
Finally, long payment terms slow accounts receivable turnover, reducing asset turnover.
However, there are a number of meaningful measures that are readily understood and should be used as a basis for disclosure, such as inventory and accounts receivable turnover.
 
 
 
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