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Receivables Turnover Ratio Formula

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Receivables Turnover Ratio is a simple metric that is used to measure how effective a business is at collecting debt and extending credit. Check FAQs

RTR = \frac{NS}{AAR}

RTR - Receivables Turnover Ratio?NS - Net Sales?AAR - Average Accounts Receivables?

Receivables Turnover Ratio Example

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Here is how the Receivables Turnover Ratio equation looks like with Values.

Here is how the Receivables Turnover Ratio equation looks like with Units.

Here is how the Receivables Turnover Ratio equation looks like.

7.2 = \frac{90000}{12500}

7.2 = \frac{90000}{12500}

7.2 = \frac{90000}{12500}

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Receivables Turnover Ratio Solution

Follow our step by step solution on how to calculate Receivables Turnover Ratio?

FIRST Step Consider the formula

RTR = \frac{NS}{AAR}

Next Step Substitute values of Variables

∴

RTR = \frac{90000}{12500}

Next Step Prepare to Evaluate

∴

RTR = \frac{90000}{12500}

LAST Step Evaluate

∴

RTR = 7.2

Receivables Turnover Ratio Formula Elements

Variables

Receivables Turnover Ratio

Receivables Turnover Ratio is a simple metric that is used to measure how effective a business is at collecting debt and extending credit.

Symbol: RTR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Receivables Turnover Ratio

Net Sales

Net Sales are the number of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and any discounts allowed.

Symbol: NS

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Sales

Average Accounts Receivables

Average Accounts Receivables is the sum of starting and ending accounts receivable over a time period (such as monthly or quarterly), divided by 2.

Symbol: AAR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Accounts Receivables

Other formulas in Operating and Turnover Ratios category

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DA = \frac{TL}{TA}

Go Debt to Equity Ratio

R D/E = \frac{TL}{TSE} \cdot 100

How to Evaluate Receivables Turnover Ratio?

Receivables Turnover Ratio evaluator uses Receivables Turnover Ratio = Net Sales/Average Accounts Receivables to evaluate the Receivables Turnover Ratio, The Receivables Turnover Ratio formula is defined as an efficiency ratio that measures how efficiently a company is collecting revenue and by extension, how efficiently it is using its assets. Receivables Turnover Ratio is denoted by RTR symbol.

How to evaluate Receivables Turnover Ratio using this online evaluator? To use this online evaluator for Receivables Turnover Ratio, enter Net Sales (NS) & Average Accounts Receivables (AAR) and hit the calculate button.

FAQs on Receivables Turnover Ratio

What is the formula to find Receivables Turnover Ratio?

The formula of Receivables Turnover Ratio is expressed as Receivables Turnover Ratio = Net Sales/Average Accounts Receivables. Here is an example- 7.2 = 90000/12500.

How to calculate Receivables Turnover Ratio?

With Net Sales (NS) & Average Accounts Receivables (AAR) we can find Receivables Turnover Ratio using the formula - Receivables Turnover Ratio = Net Sales/Average Accounts Receivables.

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Receivables Turnover Ratio Formula

Receivables Turnover Ratio Example

Receivables Turnover Ratio Solution

Receivables Turnover Ratio Formula Elements

Other formulas in Operating and Turnover Ratios category

How to Evaluate Receivables Turnover Ratio?

FAQs on Receivables Turnover Ratio

Variable Name