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Receivables Turnover Calculator

Written by:
PK

Here is a receivables turnover calculator, which computes how quickly a company turns over its receivables, or sales extended on credit to customers. Enter the company's net credit sales (or, optionally, top line sales) and two period's accounts receivable to compute the ratio.

Accounts Receivable Turnover Calculator

What is the receivables turnover ratio?

The receivables turnover ratio is a liquidity ratio which measures how quickly and efficiently a company turns credit sales into cash. The canonical measure uses net credit sales (sales on credit netting out sales returns and allowances), but for companies which do most sales on credit using revenue will work decently as well.

The receivables turnover ratio is related to the average collection period, which estimates how long the weighted average customer takes to pay for goods or services.

Receivables Turnover Ratio Formula

The receivables turnover ratio formula is:

receivables\ turnover\ ratio=\frac{net\ credit\ sales}{average\ accounts\ receivable}

Where:

  • Net Credit Sales – Sales from credit, net of returns and allowances. Alternatively, substitute top-line revenue.
  • Average Accounts Receivable – The average accounts receivable between the current period and the first period used to calculate the net credit sales (or revenue) above.

Other Liquidity Calculators

Liquidity ratios and calculations guess how easy it would be for a company to deal with its current debt and liabilities. See more liquidity tools here:

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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