A turnover ratio of 4 indicates that your business collects average receivables four times per year or once per quarter. If your credit policy requires payment within 30 days, you might want your ratio to be closer to 12. Yes, accounts receivable turnover can be used as one of the metrics to assess a company’s […]

To keep track of the cash flow (movement of money), this has to be recorded in the accounting books (bookkeeping is an integral part of healthy business activity). This legal claim that the customers will pay for the product, is called accounts receivables, and related factor describing its efficiency is called the receivables turnover ratio. […]

Companies may do this accidentally or for a specific reason, it is not necessarily a deliberate attempt to mislead investors. Regardless of the why Investors must remain vigilant and understand how a ratio is calculated before making decisions on whether to invest or not. Norms that exist for receivables turnover ratios are industry-based, and any […]