Accounts Receivable Turnover Ratio

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on January 31, 2024


The accounts receivable turnover ratio, also known as the debtors turnover ratio, indicates the effectiveness of a company's credit control system.

Much like the inventory turnover ratio, the accounts receivable turnover ratio shows how many times debtors are extended credit that they fully repay each year. It is calculated as shown below.

Formula For Accounts Receivable Turnover Ratio

Accounts Receivable Turnover Ratio Formula


Fine Company sells goods on credit. The following data relates to the company's most recent accounting period:

  • Net sales: $4,800,000
  • Accounts receivable at the end of the year: $800,000

Required: Calculate Fine Company's accounts receivable turnover ratio.


Accounts receivable turnover ratio = Sales/Average accounts receivable

= $480,000/$900,000*

*(1,000,000 + 800,000)/2

= 5.33 times (A rather slow rate of debtors turnover for a trading company).

Accounts Receivable Turnover Ratio FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.