Average turnover ratios for the company’s industry. An AR turnover ratio of 7.8 has more analytical value if you can compare it to the average for your industry. An industry average of 10 means Company X is lagging behind its peers, while an average ratio of 5.7 would indicate they’re ahead of the pack.

What is the formula for debtors turnover ratio?

Debtors Turnover Ratio = Net Credit Sales/Average Account Receivable. Where, Average Account Receivable includes trade debtors and bill receivables. Higher the Debtors turnover ratio, better is the credit management of the firm.

How to calculate the turnover ratio of receivables?

Following are the 2 variants of the formula for calculating receivable turnover ratio: Receivable Turnover Ratio = Credit Sales / Average Bills Receivables OR Receivable Turnover Ratio = Credit Sales / {(Beginning Net Receivables + Ending Net Receivables)/2}

How does the a / are turnover ratio work for Apple?

A/R Turnover Formula = Net Credit Sales / Average Accounts Receivable. Apple Inc. (AAPL) 2017 Net Credit Sales What does the A/R turnover ratio measure? The A/R turnover ratio is part of a larger family of financial ratios known as asset management ratios, or activity ratios.

How to calculate average accounts receivable for a company?

First, use a company’s balance sheet to calculate average receivables during the period: Average Accounts Receivable Formula = (beginning A/R + ending A/R) / 2 Apple Inc. (AAPL) 2017 Current Assets Next, divide the average receivables balance by net credit sales during the period.

What does it mean to have high Accounts Receivable Turnover?

A high receivables turnover is desirable and indicates that the company’s collection of accounts receivable is efficient. A high accounts receivable turnover also indicates that the company enjoys a high-quality customer base that is able to pay their debts quickly.