Accounts Receivable Turnover Ratio

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Accounts receivable turnover ratio, abbreviated as AR, measures how effectively a buisness uses customer credit and collects payments on the resulting debt.

 

accounts receivable turnover ratio Formula

\(\large{ AR =  \frac{ NCS }{ AAR }  }\)  

Where:

\(\large{ AR }\) = accounts receivable turnover ratio

\(\large{ AAR }\) = average accounts receivable

\(\large{ NCS }\) = net credit sales

 

Tags: Equations for Manufacturing