Account Receivable Turnover Formula measures how well a company is performing in terms of collecting payments from its customers. The formula helps to determine the number of times during an accounting period that a company’s accounts receivable have been collected, paid or written off. It is calculated by taking the number of credit sales within a certain period, divided by the average of the associated accounts receivable balance at the start and end of the period. This formula gives businesses insight into their billing practices, customer payment behavior and overall financial health.