TaxTips.ca Canadian Tax and Financial Information	Accounts Receivable Turnover	TaxTips.ca does not research or endorse any product or service appearing in ads on this site. Before making a major financial decision you should consult a qualified professional. Copyright © 2012
Looking for US tax information? See USTaxTips.net

Revise your listing in the TaxTips.ca Business Directory.

Need an accounting, tax or financial advisor? Look in the TaxTips.ca Business Directory.

Glossary -> Accounts receivable turnover ratio

Accounts Receivable Turnover Ratio

The accounts receivable turnover ratio is calculated as

total credit sales in the year
average accounts receivable

Average accounts receivable can be determined 2 different ways:

	Add together the a/r balances from the beginning of the year and the end of the year, and divide by 2
	Add together the a/r totals from the end of each month, and divide by 12. This is a better way of calculating the ratio.

If this ratio decreases from one year to the next, it means the company is taking longer to collect from its customers. If the ratio increases, the company is collecting from its customers more quickly.

Revised: March 06, 2012

The information on this site is not intended to be a substitute for professional advice. Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage.
See our Business Directory for tax, accounting and finance-related firms in your area.
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.