This means that Company ABC collected its average accounts receivable roughly 8.75 times over the fiscal year ending Dec. Learn: 6 Invoicing Best Practices for Small and Midsize Businessesįor this company, the accounts receivable turnover ratio is 8.75. Income Statement and Accounts Receivable Turnover Below, you’ll find a table that breaks down an example for calculating the accounts receivable turnover ratio and receivable turnover in days based on a simplified income statement for a hypothetical business. This shows the average number of days that it takes a customer to pay your company for sales on credit. Receivable turnover in days = 365 / Receivable turnover ratio However, not all companies report cash and credit sales separately.Ī further step you can take once you have the accounts receivable turnover ratio is determining the accounts receivable turnover in days. Often, you can find a business’s net credit sales in the company’s income statement for the year. See: 6 Invoice Factoring Options for Your Business
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