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Account Receivable Turnover Ratio

oboloo Glossary

Account Receivable Turnover Ratio

The Account Receivable Turnover Ratio reflects how capable a business is at collecting its owed debts. To calculate this ratio, divide the total net credit sales for a period by the average accounts receivable during that same period. This metric helps business owners understand how efficiently their company is operating and provides valuable insight into the effectiveness of their debt collection strategy. With it, businesses can maximize the returns on their account receivables and better manage their cash flow.

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