online accounting software

Definition: Describes how long it takes for a company to collect debts.

A financial ratio that indicates the speed at which a company collects its accounts receivable, i.e: a ratio of 10 means that the company’s accounts receivable are turning over 10 times per year.

What this shows is that the company, on average, is collecting it’s receivables in 36.5 days (365 days per year divided by 10). This collection period is very important because it indicates when the company can expect to receive their payments.

How to calculate the ratio:

Accounts Receivable Turnover Ratio = Net Sales/Average Net Receivables
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e-conomic is an online accounting software used by more than 43,000 companies and 3,200 accountants worldwide - from sole practitioners to large accounting firms. The software is easy to use and flexible, and you can give your accountant free access.