Accounts Receivable Turnover Ratio

Updated October 30, 2026. Written by Salman Shawaf, Co-founder, Yonovo.

The accounts receivable turnover ratio is how many times a company collects its average receivables during a period. The formula is net credit sales divided by average accounts receivable. A higher ratio means cash comes back faster.

Receivable turnover ratio formula

Net credit sales / Average accounts receivable

Average accounts receivable is the beginning balance plus the ending balance, divided by two. Ending receivables alone will do if you label them as ending. Cash sales do not belong in the numerator. They were never a receivable, so they inflate the ratio. The receivable turnover ratio is the rate. Days sales outstanding is the day count: days in the period divided by turnover.

Receivable turnover calculator

The starting numbers match the example. The collection period line is days in the period divided by the ratio.

Net credit sales

Credit sales for the period. Do not include cash sales.Average accounts receivable

Beginning plus ending, divided by two.Period

days

Used only to convert the ratio into days. 365 for a year.

Receivable turnover

6.67times

Higher means you collect the book more often.

Collection period54.75 days

Worked example

Illustration only. Annual net credit sales are $1,200,000. Average receivables are $180,000.

Turnover = 1,200,000 / 180,000 = 6.67 times a year. The unrounded ratio is 6.666...
Collection period = 365 / (1,200,000 / 180,000) = 54.75 days. Dividing by the rounded 6.67 gives 54.7, so use the exact ratio.
Check it the other way: (180,000 / 1,200,000) x 365 = 54.75 days. That is DSO.

A ratio of 6.67 is not good or bad until you know the terms. On Net 30, 54.75 days is slow. On Net 60, it is inside terms. See the same example on the DSO and average collection period pages.

What is a good receivable turnover ratio?

Convert the ratio to days, then compare the days with your terms. There is no single good ratio across industries.

One public anchor converts cleanly. The Credit Research Foundation reported a median DSO of 40.12 days for US credit departments in the first quarter of 2026. On a 365 day year, that median is 365 / 40.12, about 9.1 turns. That is arithmetic on their DSO figure. CRF does not publish a turnover benchmark, and you should not quote 9.1 as if they had. APQC says top performers collect in 30 days or less (about 12 turns on a 365 day year) and bottom performers take 46 days or longer (about 7.9 turns). Same caveat: those are conversions of a day-count benchmark.

If turnover is falling, open the aging report and see which customers moved into later buckets. The operating fix is the collections sequence: a reminder before the due date, then email, SMS, phone, and WhatsApp on a schedule. That is what accounts receivable collections software runs, on top of QuickBooks Online, Xero, NetSuite, Sage Intacct, Odoo, Stripe Billing, BILL, FreshBooks, Salesforce, HubSpot, or SAP.

Frequently asked questions

Accounts receivable turnover is the number of times a company collects its average receivables during a period. A ratio of 6 means the book was collected about six times. Higher turnover means cash returns faster, as long as credit sales and receivables cover the same period.

Receivable turnover ratio = net credit sales / average accounts receivable. Average receivables are the beginning balance plus the ending balance, divided by two. Use net credit sales, not cash sales, because cash sales never sit in receivables.

Divide net credit sales by average accounts receivable. Example: $1,200,000 of annual credit sales and $180,000 of average receivables gives 1,200,000 / 180,000 = 6.67 times. The day equivalent is 365 / 6.67 = 54.75 days.

There is no universal good ratio. Convert the ratio to days and compare those days with your terms. A published anchor is the Credit Research Foundation median DSO of 40.12 days in the first quarter of 2026. On a 365 day year, that median is about 9.1 turns (365 / 40.12). That conversion is arithmetic on their DSO figure. CRF does not publish a turnover benchmark.

Turnover is a rate. DSO is a day count. DSO = days in the period / receivable turnover. A turnover of 6.67 and a DSO of 54.75 days are the same collection speed, stated two ways.