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Accounts Receivable Turnover Ratio Calculator - Glossary:
Using our accounts receivable turnover ratio calculator, helps to compare, measure, understand the overall health of the business.
Accounts Receivable Turnover Ratio:
Shows the proportion of Net Sales to Average Account Receivable.
In simple words, it helps a company to determine the average time it took to collect its money.
How to calculate?
Accounts Receivable (AR) Turnover Ratio = Net Sales/Average Accounts Receivable.
The values are commonly stated against accounts receivable in the balance and net sales in income statement.
Average Accounts Receivable (AR) = (Begin Accounts Receivable + Ending Accounts Receivable)/2
Total sales less returns and bad debts.
Account receivable is balance sheet component - net value of credit sales during a given period.
Average Accounts Receivable:
An average value of accounts receivable value at the beginning of the year and accounts receivable value at the end of the year.
Account receivable turnover ratio for a company with a net sales income of $360,000 and average accounts receivable of $30,000 is 12 times. It means that an average customer took 30 days to pay the company's credit sales.
It is an accounting ratio that helps a company to determine the average time it took to collect its money (AR) by dividing the Asset Turnover Ratio/365days.
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