Accounts receivable turnover

From Wikicpa

The Accounts receivable turnover ratio is a good measure of a company's success in inforcement of it's credit policy.

Formula

Results

The ratio can be compared with prior years' results or with industry ratios. The higher the ratio, the better the performance. A ratio that is low relative to prior years or to the industry average might indicate an internal control problem related to uncollectibility of receivables. A decrease in the turnover ratio might also reflect fictitious credet sales. A low ratio could also be caused by employee fraud if collections are not properly posted to customer accounts.