Accounts receivable turnover ratio
Accounts receivable turnover ratio (or, simply, accounts receivable turnover) is a ratio that indicates the number of times accounts receivable are converted to cash within a given period and the effectiveness of a company's credit policy.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Accounts receivable turnover ratio. A ratio that indicates the number of times accounts receivable are converted to cash within a given period and the effectiveness of a company's credit policy.
According to Managerial Accounting by Braun, Tietz (5th edition),
- Accounts receivable turnover. Measures a company's ability to collect cash from credit customers. To compute accounts receivable turnover, divide net credit sales by average net accounts receivable.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
