accounts receivable turnover investment & finance definition
Net sales divided by average net accounts
receivable. This financial measure shows the relative size of a company’s
accounts receivables and how well the company is doing at collecting the money
it is owed. In order to be relevant, a company’s turnover must be compared with
others in the industry.
See accounts receivable turnover in Wall Street Words
The number of times in each accounting period that a firm converts credit sales into cash. A high turnover indicates effective granting of credit and collection from customers by the firm's management. Accounts receivable turnover is calculated by dividing the average amount of receivables into annual credit sales. Also called
receivables turnover. See also
activity ratio,
collection period.
Learn more about accounts receivable turnover