Receivables Turnover Formula
Receivables Turnover =
Net Credit Sales / Average Account Receivables
What is Receivables Turnover?
Receivables Turnover is a tool used by companies to evaluate how well they choose their customers (who they extend credit to) and how well they collect on their debts. A high ratio is a good sign and means they do well collecting debts; this could also mean that their sales are primarily from a cash basis, so be aware of this when evaluating this measure.