Receivables Turnover Ratio
the receivables turnover ratio is an accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. while cash transactions have the advantage of ? balance sheet ? as the received payment for good or service, most companies often rely on credit sales which take place over a period of time. the receivables turnover ratio focuses on how efficient the company is in collecting these funds. to calculate the ratio, divide the firm's net credit sales by its average accounts receivable. the average accounts receivable for a given period can be found by taking the begining and ending amounts and dividing by two. for example, over the past year, wanda's widget company had net credit sales of $50,000 and an average accounts receivable balance of $5,000. given ? organization a ratio of ten. the company's management can compare this figure to prior years or even break it down monthly or quarterly to determine trends in its net collections. generally, a higher number means the company is good at getting customers to pay up and since credit sales are essentially interest free loans to the buyer, quick payments allow for a more effective use of assets. in some limited circumstances, a high ratio may actually be a warning sign. if the company is too tight in extending credit, it might want to ? its policies to increase revenue. savvy investors use the receivables turnover ratio to help determine if lending practices are ultimately adding to the bottom line or taking from it.
- receivables turnover ratio・・・売掛金回転率