Receivables Turnover Ratio is an accounting measure, an activity ratio that measures how effective a company is in using its assets.
Receivables turnover ratio is calculated by dividing Net Credit Sales by Average Accounts Receivable.
High Receivables turnover ratio tells us that there is efficient extension of credits, or the company is operating on a cash basis. Low receivables turnover ratio shows us that the company should re-manage its credit policy in order to ensure regular credit collection.
