{"id":7869,"date":"2024-10-09T12:17:42","date_gmt":"2024-10-09T12:17:42","guid":{"rendered":"https:\/\/alwadiholding.com\/aw-egypt\/?p=7869"},"modified":"2024-10-13T11:45:27","modified_gmt":"2024-10-13T11:45:27","slug":"accounts-receivable-turnover-ratio","status":"publish","type":"post","link":"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/","title":{"rendered":"Accounts Receivable Turnover Ratio| Formula and how to Calculate"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"7869\" class=\"elementor elementor-7869\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-73762a5d cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"73762a5d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1f43536e cspt-bg-color-over-image\" data-id=\"1f43536e\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6f8cb1aa elementor-widget elementor-widget-text-editor\" data-id=\"6f8cb1aa\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p><span style=\"font-size: 14pt\">The accounts receivable turnover ratio is one metric that is used to measure how effective our collection performance for the accounts receivables, it depends on the sales amount based on credit to your clients and the collected amount of the invoices issued for those lines of sales.<\/span><\/p><p><strong><span style=\"font-size: 14pt\">bear with us in this blog as we are going to tell you the receivable turnover ratio examples, the formulas and receivable turnover ratio calculator and how to track it.\u00a0<\/span><\/strong><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#What_is_the_Accounts_Receivable_Turnover_Ratio\" title=\"What is the\u00a0Accounts Receivable Turnover Ratio?\u00a0\">What is the\u00a0Accounts Receivable Turnover Ratio?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Receivable_Turnover_Ratio_Example\" title=\"Receivable Turnover Ratio Example\u00a0\">Receivable Turnover Ratio Example\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#High_Accounts_Receivable_Turnover_Ratio\" title=\"High Accounts Receivable Turnover Ratio:\u00a0\">High Accounts Receivable Turnover Ratio:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Average_Accounts_Receivable_Formula\" title=\"Average Accounts Receivable Formula:\u00a0\">Average Accounts Receivable Formula:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Low_Accounts_Receivable_Turnover_Ratio\" title=\"Low Accounts Receivable Turnover Ratio:\u00a0\">Low Accounts Receivable Turnover Ratio:\u00a0<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#What_is_a_Good_Accounts_Receivable_Turnover_Ratio\" title=\"What is a Good Accounts Receivable Turnover Ratio?\u00a0\">What is a Good Accounts Receivable Turnover Ratio?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#How_to_Calculate_Your_Accounts_Receivable_Turnover\" title=\"How to Calculate Your Accounts Receivable Turnover?\u00a0\">How to Calculate Your Accounts Receivable Turnover?\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Calculate_Average_Accounts_Receivable\" title=\"Calculate Average Accounts Receivable:\u00a0\">Calculate Average Accounts Receivable:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#_Average_Accounts_Receivable_Beginning_AR_Ending_AR_2\" title=\"\u00a0 Average Accounts Receivable=\u00a0 Beginning AR + Ending AR \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a02\">\u00a0 Average Accounts Receivable=\u00a0 Beginning AR + Ending AR \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a02<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Calculate_AR_Turnover_Ratio\" title=\"Calculate AR Turnover Ratio:\u00a0\">Calculate AR Turnover Ratio:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Calculate_AR_Turnover_Ratio_Net_Sales_Average_Accounts_Receivable\" title=\"Calculate AR Turnover Ratio= \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Net Sales\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Average Accounts Receivable\u00a0\">Calculate AR Turnover Ratio= \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Net Sales\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Average Accounts Receivable\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#Tracking_Accounts_Receivable_Turnover_Ratios\" title=\"Tracking Accounts Receivable Turnover Ratios:\u00a0\">Tracking Accounts Receivable Turnover Ratios:\u00a0<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#How_to_Improve_Your_Accounts_Receivable_Turnover\" title=\"How to Improve Your Accounts Receivable Turnover?\">How to Improve Your Accounts Receivable Turnover?<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#In_Conclusion\" title=\"In Conclusion:\u00a0\">In Conclusion:\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/accounts-receivable-turnover-ratio\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_is_the_Accounts_Receivable_Turnover_Ratio\"><\/span><span style=\"font-size: 24pt;color: #642b3e\"><b>What is the\u00a0<\/b><b>Accounts<\/b> <b>Receivable Turnover Ratio<\/b><b>?<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-442a46f cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"442a46f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0c48547 cspt-bg-color-over-image\" data-id=\"0c48547\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b5c1e0b elementor-widget elementor-widget-image\" data-id=\"b5c1e0b\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=\".svg\"]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block}<\/style>\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"847\" height=\"388\" src=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-1024x469.webp\" class=\"attachment-large size-large wp-image-7882\" alt=\"Accounts Receivable Turnover\" srcset=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-1024x469.webp 1024w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-300x138.webp 300w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-768x352.webp 768w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-1536x704.webp 1536w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram-770x353.webp 770w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/accounts-receivable-turnover-diagram.webp 1697w\" sizes=\"(max-width: 847px) 100vw, 847px\" data-id=\"7882\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-56ef68f cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"56ef68f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c09e0d2 cspt-bg-color-over-image\" data-id=\"c09e0d2\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-ad53385 elementor-widget elementor-widget-text-editor\" data-id=\"ad53385\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 14pt\">It is an efficiency metric that aim to measure how effective our collection efforts by turning the accounts receivable portfolio we have into cash in a specific accounting time frame usually between 30 to 90 days max. It is a strong indicator for expected cash flow and help us in decide whether to extend credit sales type to specific clients or not based on their payment commitment and responding to our collection attempts. \u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-63dbc73 elementor-widget elementor-widget-image\" data-id=\"63dbc73\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"847\" height=\"169\" src=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Pink-Simple-Timeline-Infographic-5.webp\" class=\"attachment-large size-large wp-image-7884\" alt=\"Receivable Turnover Ratio Example\" srcset=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Pink-Simple-Timeline-Infographic-5.webp 1000w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Pink-Simple-Timeline-Infographic-5-300x60.webp 300w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Pink-Simple-Timeline-Infographic-5-768x154.webp 768w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Pink-Simple-Timeline-Infographic-5-770x154.webp 770w\" sizes=\"(max-width: 847px) 100vw, 847px\" data-id=\"7884\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-9f69067 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"9f69067\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6b9c000 cspt-bg-color-over-image\" data-id=\"6b9c000\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-20810ae cspt-btn-shape-rounded elementor-align-center cspt-btn-color-globalcolor cspt-btn-style-flat elementor-widget elementor-widget-button\" data-id=\"20810ae\" data-element_type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/contact\/\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">Talk to an expert!<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-811936c cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"811936c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0e4cf74 cspt-bg-color-over-image\" data-id=\"0e4cf74\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-93b2d66 elementor-widget elementor-widget-text-editor\" data-id=\"93b2d66\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h2><span class=\"ez-toc-section\" id=\"Receivable_Turnover_Ratio_Example\"><\/span><span style=\"font-size: 24pt;color: #642b3e\"><b>Receivable Turnover Ratio<\/b><b> Example<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><p><span style=\"font-size: 14pt\">Every company could sell its products or services on credit which means providing you with service or deliver the product to you for right away usage, issue an invoice for the price of this service or product and collect it later based on the terms and due date agreed on this issued invoice.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">Based on the collection performance or the actual amount placed on the bank account from those sold services or products we can identify our receivable turnover ratio based on the below examples:\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><ul><li><h3><span class=\"ez-toc-section\" id=\"High_Accounts_Receivable_Turnover_Ratio\"><\/span><span style=\"font-size: 18pt\"><b>High <\/b><b>Accounts<\/b> <b>Receivable Turnover Ratio:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3><\/li><\/ul><p><span style=\"font-size: 14pt\">Let\u2019s say you are farming company owner; you have your own farms that produces different kinds of fruits and vegetables, also you manage your own distribution channels as well, you are working on HORECA model which means supplying hotels, restaurants and cafes with their needs of fruits and vegetables, you sell to the hotel brands on credit due to their creditworthiness but with cafes and restaurants you apply strict payment terms and collect in advance, at end of the accounting time the accounts receivable turnover rate is <b>10<\/b>, which means the average accounts receivable is collected in <b>36.5 days<\/b> (<b>10% of 365 days<\/b>) and this is from the hotel chains you are dealing with which indicates a good and higher AR ratio.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p><ul><li><h3><span class=\"ez-toc-section\" id=\"Average_Accounts_Receivable_Formula\"><\/span><span style=\"font-size: 18pt\"><b>Average Accounts Receivable Formula:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3><\/li><\/ul><p><span style=\"font-size: 14pt\">Let\u2019s imagine you have a pharmacy; you sell the medicines in cash but at the same time you have decided to deal and enroll in some medical insurance networks to have wider reach and expand your customer base, the medical insurance companies doesn\u2019t pay immediately, they usually go to a long process of collection from their clients and pays your bills at last, on the other hand you need to pay some obligations on time like utilities, taxes, and buy new medicine shipments because your inventory is about to be out of stock, the cash amount you have from the clients you sell them out of insurance network got you covered for your purchases and payments until you collect your accounts receivable from the insurance companies.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><ul><li><h3><span class=\"ez-toc-section\" id=\"Low_Accounts_Receivable_Turnover_Ratio\"><\/span><span style=\"font-size: 18pt\"><b>Low <\/b><b>Accounts<\/b> <b>Receivable Turnover Ratio:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3><\/li><\/ul><p><span style=\"font-size: 14pt\">You are an Exporter who export beverages for other country, the loading and unloading process\u00a0takes some time, add to the logistics complexities until you deliver the shipments to the importer, after that the importer has un effective distribution channels and process that takes him time to sell the goods and transfer your money, you find yourself taking from 4 to 6 month to collect your invoice payments from the importer which affects your cash flow and result to lower receivable turnover ratio.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">\u00a0\u00a0<\/span><\/p><h2><span class=\"ez-toc-section\" id=\"What_is_a_Good_Accounts_Receivable_Turnover_Ratio\"><\/span><span style=\"font-size: 24pt;color: #642b3e\"><b>What is a Good Accounts <\/b><b>Receivable Turnover Ratio<\/b><b>?<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><p><span style=\"font-size: 14pt\">As you see from previous examples you got a taste of what good accounts receivable turnover ratio looks like, if the turnover number is higher and increasing that\u2019s mean OK, cause your ability to collect your cash and income is strong and this reflects to a stable financial position, if vice versa, you will need to evaluate your collection strategy to identify where your gap is.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><h2><span class=\"ez-toc-section\" id=\"How_to_Calculate_Your_Accounts_Receivable_Turnover\"><\/span><span style=\"font-size: 18pt;color: #642b3e\"><b>How to Calculate Your Accounts Receivable Turnover?<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><p><span style=\"font-size: 14pt\">Divide the net sales by average account receivables.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">Net sales are calculated by subtracting sales returns and allowances from total credit sales. \u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">Average accounts receivable is calculated by dividing the sum of the beginning and ending balances of accounts receivable over a specific period (Monthly, quarterly or annually) divided by two.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-d0bda52 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"d0bda52\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1a7d541 cspt-bg-color-over-image\" data-id=\"1a7d541\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-e1d96aa elementor-widget elementor-widget-text-editor\" data-id=\"e1d96aa\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 18pt\"><strong><span class=\"TextRun SCXW265356032 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW265356032 BCX0\">\u00a0Accounts Receivables Turnover =\u00a0 <\/span><\/span><\/strong><\/span><strong><span style=\"font-size: 18pt\"><span class=\"TextRun SCXW265356032 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW265356032 BCX0\">Net Annual Credit Sales<\/span><\/span><span class=\"TextRun SCXW265356032 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW265356032 BCX0\"> \u00f7\u00a0 \u00a0<\/span><\/span><span class=\"TextRun SCXW265356032 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW265356032 BCX0\">Average Accounts\u00a0<\/span><\/span><\/span><\/strong><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ad9664c cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ad9664c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-55347ba cspt-bg-color-over-image\" data-id=\"55347ba\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-3bdeef1 elementor-widget elementor-widget-text-editor\" data-id=\"3bdeef1\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 18pt\"><strong>Here is an Example:<\/strong> Example of Calculating AR Turnover Ratio\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\"><b>Scenario<\/b>: A company, ABC Corp., has the following data for a year:\u00a0<\/span><\/p><ul><li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span style=\"font-size: 14pt\"><b>Net Sales<\/b>: $1,000,000\u00a0<\/span><\/li><\/ul><ul><li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span style=\"font-size: 14pt\"><b>Beginning Accounts Receivable<\/b>: $100,000\u00a0<\/span><\/li><\/ul><ul><li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span style=\"font-size: 14pt\"><b>Ending Accounts Receivable<\/b>: $150,000\u00a0<\/span><\/li><\/ul><h3><span class=\"ez-toc-section\" id=\"Calculate_Average_Accounts_Receivable\"><\/span><span style=\"font-size: 18pt\"><b>Calculate Average Accounts Receivable:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-be278f2 elementor-section-height-min-height cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-items-middle\" data-id=\"be278f2\" data-element_type=\"section\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t\t\t<div class=\"elementor-background-overlay\"><\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-83d7eb3 cspt-bg-color-over-image\" data-id=\"83d7eb3\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-ef4c1e5 elementor-widget elementor-widget-text-editor\" data-id=\"ef4c1e5\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h3 style=\"text-align: center\"><span class=\"ez-toc-section\" id=\"_Average_Accounts_Receivable_Beginning_AR_Ending_AR_2\"><\/span><span style=\"font-size: 18pt\"><strong><span style=\"color: #000000\">\u00a0 Average Accounts Receivable=\u00a0 <span style=\"text-decoration: underline\">Beginning AR + Ending AR<\/span> <\/span><\/strong><\/span><span style=\"font-size: 18pt\"><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<span style=\"font-size: 14pt\">2<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f20e575 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f20e575\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-bb35ef7 cspt-bg-color-over-image\" data-id=\"bb35ef7\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-ff20fff elementor-widget elementor-widget-text-editor\" data-id=\"ff20fff\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p style=\"text-align: left\"><span style=\"font-size: 14pt\">Beginning AR + Ending AR \/2\u00a0<\/span><\/p><p><span style=\"font-size: 14pt;color: var( --e-global-color-text );font-family: var( --e-global-typography-text-font-family ), Sans-serif;font-weight: var( --e-global-typography-text-font-weight )\">($100,000 + $150,000) \/ 2 = $125,000\u00a0<\/span><\/p><h3><span class=\"ez-toc-section\" id=\"Calculate_AR_Turnover_Ratio\"><\/span><span style=\"font-size: 18pt\"><b>Calculate AR Turnover Ratio<\/b>:\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f4b420e elementor-section-height-min-height cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-items-middle\" data-id=\"f4b420e\" data-element_type=\"section\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n\t\t\t\t\t\t\t<div class=\"elementor-background-overlay\"><\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-94663ce cspt-bg-color-over-image\" data-id=\"94663ce\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8db4bfd elementor-widget elementor-widget-text-editor\" data-id=\"8db4bfd\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h3 style=\"text-align: center\"><span class=\"ez-toc-section\" id=\"Calculate_AR_Turnover_Ratio_Net_Sales_Average_Accounts_Receivable\"><\/span><strong><span style=\"font-size: 18pt\">Calculate AR Turnover Ratio= <span style=\"text-decoration: underline\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Net Sales\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/span><\/span><\/strong><span style=\"font-size: 14pt\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <span style=\"font-size: 18pt\"><strong>Average Accounts Receivable\u00a0<\/strong><\/span><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7cfd0ce cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7cfd0ce\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e9c092a cspt-bg-color-over-image\" data-id=\"e9c092a\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-7e77102 elementor-widget elementor-widget-text-editor\" data-id=\"7e77102\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 14pt\">Net Sales \/ Average Accounts Receivable\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">$1,000,000 \/ $125,000 = 8\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\"><span style=\"text-decoration: underline\"><b>Interpretation<\/b>:<\/span> ABC Corp.&#8217;s AR turnover ratio for the year is 8. This means that the company collected its average accounts receivable approximately 8 times during the year. A higher ratio generally indicates better credit management and quicker collection of debts.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\"><span style=\"text-decoration: underline\"><b>Note<\/b><\/span>: Don\u2019t forget to assess the performance of ABC Corp.&#8217;s AR turnover ratio, it&#8217;s essential to compare it to industry benchmarks or the company&#8217;s historical performance. A ratio of 8 might be considered good, but it depends on the specific industry and the company&#8217;s goals.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><h3><span class=\"ez-toc-section\" id=\"Tracking_Accounts_Receivable_Turnover_Ratios\"><\/span><span style=\"font-size: 18pt;color: #642b3e\"><b>Tracking <\/b><b>Accounts<\/b> <b>Receivable Turnover Ratios<\/b><b>:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3><p><span style=\"font-size: 14pt\">Keeping track of your accounts receivable ratios is vital for your business. If your ratios fall, it could indicate the need for tighter credit controls and increased collection efforts. On the other hand, if your ratios rise excessively, your credit policies and collection methods may be too restrictive, limiting sales.\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">\u00a0\u00a0<\/span><\/p><p><span style=\"font-size: 14pt\">By knowing how quickly your invoice payment terms, you can plan more effectively and have a clearer picture of your future cash flow and the ability to loosen up more with your clients in payment schedules.\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4e31871 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4e31871\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2dc20e4 cspt-bg-color-over-image\" data-id=\"2dc20e4\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2dce1d8 elementor-widget elementor-widget-heading\" data-id=\"2dce1d8\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px}<\/style><h2 class=\"elementor-heading-title elementor-size-default\"><span class=\"ez-toc-section\" id=\"How_to_Improve_Your_Accounts_Receivable_Turnover\"><\/span>How to Improve Your Accounts Receivable Turnover? <span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-0c4bc17 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"0c4bc17\" data-element_type=\"section\" data-settings=\"{&quot;shape_divider_top&quot;:&quot;waves&quot;}\">\n\t\t\t\t\t<div class=\"elementor-shape elementor-shape-top\" data-negative=\"false\">\n\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 1000 100\" preserveAspectRatio=\"none\">\n\t<path class=\"elementor-shape-fill\" d=\"M421.9,6.5c22.6-2.5,51.5,0.4,75.5,5.3c23.6,4.9,70.9,23.5,100.5,35.7c75.8,32.2,133.7,44.5,192.6,49.7\n\tc23.6,2.1,48.7,3.5,103.4-2.5c54.7-6,106.2-25.6,106.2-25.6V0H0v30.3c0,0,72,32.6,158.4,30.5c39.2-0.7,92.8-6.7,134-22.4\n\tc21.2-8.1,52.2-18.2,79.7-24.2C399.3,7.9,411.6,7.5,421.9,6.5z\"\/>\n<\/svg>\t\t<\/div>\n\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c655856 cspt-bg-color-over-image\" data-id=\"c655856\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-236a491 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"236a491\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-230afcb cspt-bg-color-over-image\" data-id=\"230afcb\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-72e991a elementor-widget__width-initial elementor-widget elementor-widget-image\" data-id=\"72e991a\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"434\" height=\"551\" src=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Screenshot_8.webp\" class=\"attachment-large size-large wp-image-7898\" alt=\"5 steps to following up on a past due invoice\" srcset=\"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Screenshot_8.webp 434w, https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Screenshot_8-236x300.webp 236w\" sizes=\"(max-width: 434px) 100vw, 434px\" data-id=\"7898\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-22c353f cspt-bg-color-over-image\" data-id=\"22c353f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8130ed4 elementor-widget__width-initial elementor-widget elementor-widget-text-editor\" data-id=\"8130ed4\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 12pt\">By implementing effective strategies to improve your <span class=\"TextRun Highlight SCXW114125382 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW114125382 BCX0\">receivable turnover ratio<\/span><\/span>, you can enhance your business&#8217;s financial health and ensure timely payments. <\/span><span style=\"font-size: 12pt\">For a <span style=\"color: #622b40\"><strong>step-by-step guide on how to follow up on past due invoices.<\/strong><\/span><\/span><\/p><p><span style=\"font-size: 14pt\"><span style=\"color: #622b40\"><strong>Check out<\/strong><\/span> our comprehensive blog post. By following these tips, you&#8217;ll be well-equipped to collect outstanding payments and boost your overall financial performance.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4f6d099 cspt-btn-shape-rounded cspt-btn-color-globalcolor cspt-btn-style-flat elementor-widget elementor-widget-button\" data-id=\"4f6d099\" data-element_type=\"widget\" data-widget_type=\"button.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-button-wrapper\">\n\t\t\t<a class=\"elementor-button elementor-button-link elementor-size-sm\" href=\"https:\/\/alwadiholding.com\/aw-egypt\/5-steps-to-following-up-on-a-past-due-invoice\/\">\n\t\t\t\t\t\t<span class=\"elementor-button-content-wrapper\">\n\t\t\t\t\t\t\t\t\t<span class=\"elementor-button-text\">Learn More!<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<div class=\"elementor-element elementor-element-0f45c32 elementor-widget elementor-widget-text-editor\" data-id=\"0f45c32\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-size: 14pt\" data-ccp-props=\"{}\">\u00a0<\/span><\/p><h4><span class=\"ez-toc-section\" id=\"In_Conclusion\"><\/span><span style=\"font-size: 24pt;color: #642b3e\"><b>In Conclusion:<\/b>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4><p><span style=\"font-size: 14pt\">A good receivable turnover ratio is essential for assessing a company&#8217;s efficiency in managing its credit sales and collections. This ratio indicates how effectively a business converts its receivables into cash, reflecting its overall financial health. A higher receivable turnover ratio suggests that a company is promptly collecting payments from customers, which can enhance liquidity and reduce the risk of bad debts.\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-32a696b cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"32a696b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c57e495 cspt-bg-color-over-image\" data-id=\"c57e495\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a6d4855 elementor-widget elementor-widget-heading\" data-id=\"a6d4855\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h4>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-55ca178 cspt-col-stretched-none cspt-bg-color-over-image elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"55ca178\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5149350 cspt-bg-color-over-image\" data-id=\"5149350\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-379d82d elementor-widget elementor-widget-accordion\" data-id=\"379d82d\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 05-08-2024 *\/\n.elementor-accordion{text-align:start}.elementor-accordion .elementor-accordion-item{border:1px solid #d5d8dc}.elementor-accordion .elementor-accordion-item+.elementor-accordion-item{border-top:none}.elementor-accordion .elementor-tab-title{margin:0;padding:15px 20px;font-weight:700;line-height:1;cursor:pointer;outline:none}.elementor-accordion .elementor-tab-title .elementor-accordion-icon{display:inline-block;width:1.5em}.elementor-accordion .elementor-tab-title .elementor-accordion-icon svg{width:1em;height:1em}.elementor-accordion .elementor-tab-title .elementor-accordion-icon.elementor-accordion-icon-right{float:right;text-align:right}.elementor-accordion .elementor-tab-title .elementor-accordion-icon.elementor-accordion-icon-left{float:left;text-align:left}.elementor-accordion .elementor-tab-title .elementor-accordion-icon .elementor-accordion-icon-closed{display:block}.elementor-accordion .elementor-tab-title .elementor-accordion-icon .elementor-accordion-icon-opened,.elementor-accordion .elementor-tab-title.elementor-active .elementor-accordion-icon-closed{display:none}.elementor-accordion .elementor-tab-title.elementor-active .elementor-accordion-icon-opened{display:block}.elementor-accordion .elementor-tab-content{display:none;padding:15px 20px;border-top:1px solid #d5d8dc}@media (max-width:767px){.elementor-accordion .elementor-tab-title{padding:12px 15px}.elementor-accordion .elementor-tab-title .elementor-accordion-icon{width:1.2em}.elementor-accordion .elementor-tab-content{padding:7px 15px}}.e-con-inner>.elementor-widget-accordion,.e-con>.elementor-widget-accordion{width:var(--container-widget-width);--flex-grow:var(--container-widget-flex-grow)}<\/style>\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5831\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-5831\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">Is a high receivables turnover ratio good? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-5831\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-5831\"><p><span class=\"TextRun SCXW132135617 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW132135617 BCX0\">A high receivables turnover ratio is <\/span><span class=\"NormalTextRun SCXW132135617 BCX0\">generally considered<\/span><span class=\"NormalTextRun SCXW132135617 BCX0\"> good as it <\/span><span class=\"NormalTextRun SCXW132135617 BCX0\">indicates<\/span><span class=\"NormalTextRun SCXW132135617 BCX0\"> that a company is effectively managing its credit and cash flow.<\/span><\/span><span class=\"EOP SCXW132135617 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5832\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-5832\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What is a good AR to Accounts Payable Ratio? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-5832\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-5832\"><p><span class=\"TextRun SCXW35973388 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW35973388 BCX0\">A good Accounts Receivable (AR) to Accounts Payable (AP) ratio typically ranges from 1.0 to 2.0, <\/span><span class=\"NormalTextRun SCXW35973388 BCX0\">indicating<\/span><span class=\"NormalTextRun SCXW35973388 BCX0\"> a healthy balance between what a company collects versus what it owes. This ratio reflects a firm\u2019s efficiency in managing its cash flow; an AR to AP ratio below 1.0 could suggest that the company is struggling to collect payments, while a ratio significantly above 2.0 might <\/span><span class=\"NormalTextRun SCXW35973388 BCX0\">indicate<\/span><span class=\"NormalTextRun SCXW35973388 BCX0\"> that the business is too reliant on credit sales or not managing its payables effectively.<\/span><\/span><span class=\"EOP SCXW35973388 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-5833\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-5833\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-left\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-minus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">How to calculate trade payable turnover ratio? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-5833\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-5833\"><p><span class=\"TextRun SCXW193876226 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW193876226 BCX0\">The trade payable turnover ratio is a financial metric that measures how quickly a company pays off its suppliers. To calculate it, you need two key figures: the total purchases made on credit during a specific period and the average accounts payable during that same period.<\/span><\/span><span class=\"EOP SCXW193876226 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p><p><strong><span class=\"TextRun SCXW184266239 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW184266239 BCX0\">The formula is: Trade Payable Turnover Ratio = Total Credit Purchases \/ Average Accounts Payable.<\/span><\/span><span class=\"EOP SCXW184266239 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/strong><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>The accounts receivable turnover ratio is one metric that is used to measure how effective our collection performance for the accounts receivables, it depends on the sales amount based on credit to your clients and the collected amount of the invoices issued for those lines of sales. bear with us in this blog as we are going to tell you the receivable turnover ratio examples, the formulas and receivable turnover[&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":7892,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rank_math_lock_modified_date":false,"_joinchat":[],"footnotes":""},"categories":[165],"tags":[],"class_list":["post-7869","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-aw-receivable-management-service"],"acf":[],"jetpack_featured_media_url":"https:\/\/alwadiholding.com\/aw-egypt\/wp-content\/uploads\/sites\/7\/2024\/10\/Website-Blogs-pics-1-2.webp","_links":{"self":[{"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/posts\/7869"}],"collection":[{"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/comments?post=7869"}],"version-history":[{"count":33,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/posts\/7869\/revisions"}],"predecessor-version":[{"id":7912,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/posts\/7869\/revisions\/7912"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/media\/7892"}],"wp:attachment":[{"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/media?parent=7869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/categories?post=7869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alwadiholding.com\/aw-egypt\/wp-json\/wp\/v2\/tags?post=7869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}