Accounts Receivable Turnover Ratio Calculator

Formula

To calculate the Accounts Receivable Turnover Ratio ($ART$):

\[ ART = \frac{NCS}{AR} \]

Where:

$ART$ is the Accounts Receivable Turnover Ratio
$NCS$ is the Net Credit Sales
$AR$ is the Average Accounts Receivable

What is Accounts Receivable Turnover Ratio?

An accounts receivable turnover ratio is defined as the ratio of net credit sales to average accounts receivable. It measures how efficiently a company collects its receivables or how well the company manages the credit it extends to customers.

Example Calculation 1

Let's assume the following values:

Net Credit Sales ($NCS$) = $500,000
Average Accounts Receivable ($AR$) = $50,000

Using the formula:

\[ ART = \frac{500000}{50000} = 10 \]

The Accounts Receivable Turnover Ratio is 10.

Example Calculation 2

Let's assume the following values:

Net Credit Sales ($NCS$) = $300,000
Average Accounts Receivable ($AR$) = $75,000

Using the formula:

\[ ART = \frac{300000}{75000} = 4 \]

The Accounts Receivable Turnover Ratio is 4.