Accounts Receivable Turnover is a financial ratio that measures the efficiency of a company in collecting its outstanding debts from customers. It is calculated by dividing the net credit sales by the average accounts receivable balance during a specific period. A higher Accounts Receivable Turnover ratio indicates that a company is collecting its debts more quickly, which is a positive sign of its financial health and liquidity. Conversely, a lower ratio may indicate that a company is struggling to collect its debts, which could lead to cash flow problems and potential financial difficulties.
Accounts Receivable Turnover is a financial ratio that measures a company’s ability to collect its outstanding debts from customers. It is calculated by dividing the net credit sales by the average accounts receivable balance during a given period. A high accounts receivable turnover ratio indicates that a company is efficient in collecting its debts, while a low ratio suggests that the company may have difficulty collecting its outstanding debts. This ratio is commonly used by investors and creditors to evaluate a company’s financial health and creditworthiness.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/accounts-receivable-ar-turnover/
- Modern Language Association (MLA):Accounts Receivable Ar Turnover. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/accounts-receivable-ar-turnover/.
- Chicago Manual of Style (CMS):Accounts Receivable Ar Turnover. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/accounts-receivable-ar-turnover/ (accessed: May 09 2024).
- American Psychological Association (APA):Accounts Receivable Ar Turnover. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/accounts-receivable-ar-turnover/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts