Receivables Turnover Ratio Calculator

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Receivables Turnover Ratio Calculator is to measure Receivables Turnover Ratio and measures how efficiently a firm uses its assets

Receivables Turnover Ratio:
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What does Receivables Turnover Ratio mean?
The receivables turnover ratio is an accounting measure used to quantify a company’s effectiveness in extending credit and in collecting debts on that credit.
Formula
Receivables Turnover Ratio = Net Annual Credit Sales ÷ ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)
Example

The beginning accounts receivable balance for a firm is $316,000 and the ending balance $384,000. Net credit sales for the last 12 months were $3,500,000.

According, to the formula, Receivables Turnover Ratio is:-

  • $3,500,000 Net credit sales ÷ (($316,000 Beginning receivables + $384,000 Ending receivables) / 2)
  • = $3,500,000 Net credit sales ÷ $350,000 Average accounts receivable
  • = 10.0