Friday, April 9, 2010

Calculate Account Receivable Turnover

A receivable turnover ratio measures how long it takes for a company to collect on credit sales. This turnover ration tells an accountant how many times receivables are turned over. The average collection period will indicate the average length of time that a firm must wait after making a sale before it receives cash.

Receivables Turnover = Sales/ Accounts Receivable

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