Accounts Receivable Turnover

Calculation

Accounts receivable turnover is calculated by dividing net credit sales (income statement) by average net accounts receivable (balance sheet).

Interpretation

Accounts receivable turnover is a measure of liquidity and shows how many times (on average) a company collects receivables during a time period.

In general, a faster receivable turnover is desired, and should be compared amongst competitors and over time.