Accounts Receivable Turnover Calculator
Calculate accounts receivable turnover ratio
About this calculator
The Accounts Receivable Turnover Calculator measures how efficiently a company collects outstanding credit sales from customers. This financial ratio indicates how many times per year a business converts its receivables into cash, revealing the effectiveness of credit and collection policies. A higher turnover ratio suggests faster collection times and better cash flow management, while a lower ratio may indicate collection issues or overly lenient credit terms that could impact liquidity.
How to use
Enter your net credit sales for the period and average accounts receivable balance. Net credit sales exclude cash sales and returns, while average accounts receivable is calculated by adding beginning and ending receivable balances, then dividing by two. The calculator will instantly compute your turnover ratio and display the results.
Frequently asked questions
What is a good accounts receivable turnover ratio?
Generally, ratios between 7-10 are considered healthy, but this varies by industry. Compare your ratio to industry benchmarks for accurate assessment.
How do I calculate average accounts receivable?
Add your beginning accounts receivable balance to your ending balance for the period, then divide the sum by two.
Can I use annual or quarterly data?
Yes, you can use any time period, but ensure both sales and receivables data cover the same timeframe for accuracy.