Account Receivable Turnover Ratio Formula

Account Receivable Turnover Ratio Formula is used to measure the efficiency of the company to collect the credit from its customers. Some companies collect the account receivable in a short time such as in 90 days. While some companies collect credit from customers within 6 months. Account Receivable Turnover Ratio Formula also uses to measure the liquidity of the company. if the company convert receivable quickly then the company will be more liquid.

Account Receivable Turnover Ratio Formula calculated by dividing the net credit sales by average account receivable for that period.

Account Receivable Turnover Ratio Formula = Net Credit Sales/Average Account Recievable

 

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