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Kamis, 08 Februari 2018

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Compute and Understand the Accounts Receivable Turnover Ratio ...
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Receivable Turnover Ratio or Debtor's Turnover Ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.

Formula:

R e c e i v a b l e   T u r n o v e r   R a t i o = N e t   r e c e i v a b l e   s a l e s A v e r a g e   n e t   r e c e i v a b l e s {\displaystyle \mathrm {Receivable\ Turnover\ Ratio} ={\mathrm {Net\ receivable\ sales} \over \mathrm {Average\ net\ receivables} }}

A high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. While a low ratio implies the company is not making the timely collection of credit.


Video Receivables turnover ratio



Relation ratios

  • Days' sales in receivables = 365 / Receivable Turnover Ratio
  • Average Collection Period = (Days x AR)/Credit Sales
  • Average Debtor collection period: Trade Receivables/Credit Sales x 365 = Average collection period in days,
  • Average Creditor payment period: Trade Payables/Credit Purchases x 365 = Average Payment period in days,

Maps Receivables turnover ratio



See also

  • Debtor collection period
  • Cash flow
  • Working capital

Fundamentals of financial statement analysis. (Lecture 1 ...
src: cf.ppt-online.org


References


Source of the article : Wikipedia

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