The Account Receivable Turnover Ratio Formula is an enlightening measure used to assess the efficiency and liquidity of a business’s accounts receivable, or money owed to the business by customers. It measures the number of times a company collects its average accounts receivable balance per year. To calculate this ratio, you will need two figures: the company’s net credit sales and its receivables balance at the end of the period. The formula for this ratio is (Net Credit Sales/Average Accounts Receivable) x 365. By understanding this metric, businesses can ascertain how effective they are in collecting payment from clients and track the financial health of their customer base.