The Receivables Turnover Formula is a business calculation that measures how efficiently a company is collecting payments from its customers. It primarily looks at the rate of sales versus the average accounts receivable balance over the same period of time, and produces a number that indicates the speed of collection. A healthy Receivables Turnover Formula means your company has a steady inflow of cash as it quickly collects payment from its customers. While this ratio doesn’t show any financial performance or value of the receivable itself, it can help you understand the efficiency of your collections process and how quickly you are converting accounts receivable into cash.