To find the ratio, you should use the formula: How do you calculate the accounts receivable turnover ratio? Therefore, it is very important to know how you can calculate the ratio on your own and understand your business even better. Not only does this help your business operations, but will also be a factor when you’re ever applying for a business loan.

The accounts receivable turnover thus helps you determine if your business is good at collecting debts from customers and if not, where to make some changes. Otherwise, your cash flow will suffer and running the business will become difficult. It is nearly impossible to run a business without issuing a credit to your customers, you probably do the same with your suppliers, but the idea is to make sure you collect that debt. Very simply, the accounts receivable turnover is a ratio used to compare how well your business issues credit to its customers and how effective it is at collecting those debts. What is the accounts receivable turnover to be exact? When reviewing your Accounts receivable aging report to forecast your cash flow its important to understand the account receivable ratio and find ways to improve it. Despite the relatively long name, it is actually very easy to calculate and will give you some very useful insights about your business. There are several tools you can use to do this, one of them being the accounts receivable turnover ration. That’s just a fancy way of saying you need to know every aspect of your business to avoid surprises and to make necessary changes.

Running a business requires a continuous assessment of operations followed up by strategic and informed modifications.

Ar receivable turnover ratio