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Online Tools and Calculators > Financial Calculators > Receivables Turnover Ratio Calculator

Receivables Turnover Ratio Calculator

Net credit sales:
Average net receivables:

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.

Formula

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.

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