Revenue To Accounts Receivable Ratio

In comparison the revenue ratio is the ratio of a company s net credit sales compared to its average amount of accounts receivable which is also referred to as the accounts receivable turnover ratio.

Revenue to accounts receivable ratio. Accounts receivable turnover ratio 100 000 10 000 10 000 15 000 2 7 2. The accounts receivable turnover ratio also known as the debtor s turnover ratio is an efficiency ratio financial ratios financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company that measures how efficiently a company is collecting revenue and by. The accounts receivable turnover ratio or debtor s turnover ratio measures how efficiently your company collects revenue. Your efficiency ratio is the average number of times that your company collects accounts receivable throughout the year.

An accounts receivable turnover ratio of 12 means that your company collects receivables 12 times. When a company has a larger percentage of its sales happening on a credit basis credit sales credit sales refer to a sale in which the amount owed will be paid at a later date. The ar balance is based on the average number of days in which revenue will be received. Revenue in each period is multiplied by the turnover days and.