Accounts Receivable Turnover Calculator
Find how often you collect receivables per year.
Results update as you type.
How it works
Accounts receivable turnover shows how efficiently a business collects the money its customers owe, and this calculator computes it along with the average collection period. You enter your net credit sales for the period and your average accounts receivable balance, and it returns the turnover ratio and the average days to collect. The turnover is net credit sales divided by average receivables, telling you how many times over the period the business collected the full value of its outstanding receivables. A higher ratio means the company collects its receivables quickly and often, which is a sign of effective credit and collection policies and healthy cash flow. A lower ratio suggests customers are slow to pay or that credit is extended too loosely, tying up cash and raising the risk of bad debt. Dividing 365 by the turnover converts it into the average collection period in days, which is often easier to interpret and is closely related to days sales outstanding. This metric is most useful when tracked over time and compared to industry norms and your own credit terms. A turnover that corresponds to a collection period near your payment terms indicates you are collecting on schedule. Businesses improve turnover by invoicing promptly, tightening credit standards, and following up on late payments. Enter your net credit sales and average receivables to find the turnover.
AR turnover = net credit sales / average accounts receivable
Accounts receivable turnover measures how many times per year a business collects its average receivables. It divides net credit sales by the average accounts receivable balance. Dividing 365 by the turnover gives the average collection period in days. A higher turnover means faster, more efficient collection.
Source:Financial ratios
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter net credit sales and average accounts receivable.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
AR turnover ratio updates instantly as you type — no button to press.
Frequently asked questions
What is accounts receivable turnover?
Accounts receivable turnover is a ratio showing how many times a year a business collects its average outstanding receivables. It equals net credit sales divided by average accounts receivable. A higher turnover indicates the company collects payments quickly and manages credit well, supporting strong cash flow.
How do I find the average collection period from turnover?
Divide 365 by the turnover ratio. For example, a turnover of 10 times per year corresponds to an average collection period of 36.5 days. This days figure is often more intuitive than the ratio and closely relates to days sales outstanding, both indicating how long customers take to pay.
What is a good AR turnover ratio?
A higher ratio is generally better, indicating faster collection, but the ideal depends on your industry and credit terms. A turnover implying a collection period near your payment terms, such as net 30, is healthy. Comparing your ratio to industry benchmarks and tracking its trend over time gives the most meaningful assessment.
Should I use net credit sales or total sales?
Use net credit sales, the sales made on account excluding cash sales and any returns or allowances. Cash sales do not create receivables, so including them would overstate turnover. If most sales are on credit, total sales approximate it, but net credit sales give the most accurate ratio.
How can I improve accounts receivable turnover?
Invoice promptly and accurately, offer incentives for early payment, tighten credit standards for risky customers, and follow up consistently on overdue accounts. Reviewing aging receivables regularly and enforcing collection policies raises turnover, speeds up cash collection, and reduces the likelihood of receivables becoming uncollectible bad debt.