Receivables Turnover Ratio Calculator
About Receivables Turnover Ratio Calculator
The Receivables Turnover Ratio Calculator is used to calculate the receivables turnover ratio. Enter net credit sales for a period and average net receivables for the same period, then click the “Calculate” button.
Receivables Turnover Ratio Definition
Receivable Turnover Ratio is one of the accounting activity ratios, which measures the number of times, on average, receivables (e.g. Accounts Receivable) are collected during the period. It is used by analysts to assess the liquidity of receivables. It is calculated by dividing net credit sales (net sales less cash sales) by the average net accounts receivables during the year.
The following is the Receivables Turnover Ratio calculation formula:
Receivables Turnover Ratio = Net Credit Sales / Average Net Receivables
where net average receivables = (beginning net receivables + ending net receivables) / 2
For example, if a company has net credit sales of $1,000,000, beginning net receivables of $200,000 and ending net receivables of $160,000, then the Receivables Turnover Ratio is 1,000,000/[(200,000 + 160,000)/2] = 1,000,000/180,000 = 5.56.