Accounts Receivable Turnover Calculator

This tool divides net credit sales by average accounts receivable to give the turnover ratio, then turns that into days sales outstanding. Enter the credit sales for the period, the closing receivables balance and, where you have it, the opening balance, and the average of the two is used the way the ratio is meant to be taken. A second action works backwards, giving the average balance you would have to hold to reach a turnover you are aiming at and the cash that frees. The answer only means what it says if the sales are credit sales, because cash sales never sit in receivables and including them makes collection look faster than it is.

Calculator Type

How many times the receivables book is collected and replaced, and how long an invoice waits.

Net Credit Sales for the Period ($) *

Sales made on account, after returns and allowances. Leave cash sales out; if the split is not disclosed, total revenue will do and the ratio then reads a little high.

Accounts Receivable at the End of the Period ($) *

The trade receivables balance, net of the allowance for doubtful accounts.

Accounts Receivable at the Start of the Period ($, optional)

Fill this in and the average of the two balances is used, which is what the ratio is meant to take. Leave it blank to use the closing figure alone.

Length of the Period

Use the same period the sales figure covers.

Your Credit Terms (days, optional)

Net 30 means 30. Enter 0 to skip the comparison.

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What the average receivables balance has to be for the turnover you want, and what that frees.

Net Credit Sales for the Period ($) *

Sales made on account, after returns and allowances. Leave cash sales out; if the split is not disclosed, total revenue will do and the ratio then reads a little high.

Accounts Receivable at the End of the Period ($) *

The trade receivables balance, net of the allowance for doubtful accounts.

Accounts Receivable at the Start of the Period ($, optional)

Fill this in and the average of the two balances is used, which is what the ratio is meant to take. Leave it blank to use the closing figure alone.

Length of the Period

Use the same period the sales figure covers.

Target Receivables Turnover (times per period) *

Twelve turns a year is a collection period of about 30 days; fifteen is about 24.

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