Accounting Dictionary

Accounts Receivable Turnover Ratio

The accounts receivable turnover ratio is sales divided by average accounts receivable.

This measures how frequently your customers are paying. If your customers have 30 days to pay, there are 12 thirty day periods in a year so the accounts receivable turnover ratio should be 12. If it’s more than 12, the customers are not paying their bills on time. If it’s less than 12, the customers are paying early.

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