Explore commonly used personal finance terms.
Accounts receivable turnover is a financial ratio that evaluates how quickly a company collects its outstanding credit sales, calculated by dividing net credit sales by average accounts receivable. A high turnover ratio indicates efficient collections, while a low ratio suggests potential issues with credit policy or slow-paying customers. This metric is valuable for managing cash flow, indicating the effectiveness of credit terms, and assessing the company’s liquidity and working capital management.
