The Accounts Receivable Turnover ratio is a key metric that highlights the efficiency of a business’s credit and collections process. Basically, it measures how quickly customers are paying their bills. The formula for Accounts Receivable Turnover is calculated by taking the total receivables over the past year, then dividing it by the average amount owed during that same period. A high or increasing Accounts Receivable Turnover ratio indicates that customers are paying their bills quickly, which typically indicates a healthy cash flow position. Conversely, if the Accounts Receivable Turnover ratio is too low, it could mean that customers are taking too long to pay – leading to delays in payment and potential cash flow problems.