Receivable Turnover Ratio

The receivable turnover ratio is a measure of a company’s efficiency in collecting dues from its customers.

The receivable turnover ratio can be calculated using the below formula:

Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivables

A high receivable turnover ratio denotes that a company is efficient at collecting receivables from its customers, whereas low ratios denote the inefficiency at collecting receivables quickly.