IncomeChecker.com

Accounts Receivable Turnover Calculator

Find out how many times a year you collect your average receivables. Enter net credit sales and beginning and ending accounts receivable, and see the turnover ratio and the average days to collect.

$
$
$
Turnover ratio
10.0x
Days to collect
36.5
Average receivables
$60,000

The formulas

  • Average receivables = (beginning + ending) ÷ 2
  • Turnover ratio = net credit sales ÷ average receivables
  • Days to collect = 365 ÷ turnover ratio

Example. With $600,000 of net credit sales and receivables going from $50,000 to $70,000, the average is $60,000. Turnover is 10.0 times a year, so the average invoice takes 36.5 days to collect.

Things to check

  • Use credit sales only. Cash sales never sit in receivables and will inflate the ratio.
  • A higher ratio means you collect faster. Compare it with your payment terms: a 36-day collection time on Net 30 terms is close to target.
  • If your business is seasonal, the beginning-and-ending average can mislead. Use monthly balances for a truer average.

Frequently asked questions

What is a good accounts receivable turnover ratio?

It depends on your industry and payment terms. Higher is better. A ratio of 12 means you collect about every 30 days; compare it with your own terms and your sector.

How do I calculate accounts receivable turnover?

Divide net credit sales by average accounts receivable. Average receivables is the beginning balance plus the ending balance, divided by two.

What is the difference between AR turnover and average collection period?

They measure the same thing two ways. Turnover is how many times a year you collect; the collection period is how many days it takes. Days equals 365 divided by turnover.

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Calculators give estimates from the numbers you enter. They are not tax, legal, or accounting advice.