# Accounts receivable turnover

Computes the accounts receivable turnover ratio, net credit sales ÷ average accounts receivable, and the days’ sales in receivables.

- Page: https://www.acalculator.org/finance/accounts-receivable-turnover-calculator
- JSON spec: https://www.acalculator.org/finance/accounts-receivable-turnover-calculator.json
- Version: cae8eb1d4a0c

## Default answer

Example with the default inputs (Net credit sales $400,000.00, Accounts receivable at the start $70,000.00, Accounts receivable at the end $90,000.00): On net credit sales of $400,000.00, receivables turned over 5 times, so a credit sale took 73 days to collect on average.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| sales | Net credit sales | Sales on credit for the year, after returns and allowances. Use net sales if credit sales are not shown. |
| bar | Accounts receivable at the start | Accounts receivable at the start of the year. Leave empty to use the ending balance alone. |
| ear | Accounts receivable at the end | Accounts receivable at the end of the year. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| turnover | Accounts receivable turnover | Net credit sales ÷ average accounts receivable: how many times a year receivables are collected. |
| days | Days’ sales in receivables | 365 ÷ accounts receivable turnover: the average days to collect a credit sale. |
| average | Average accounts receivable | (Beginning + ending accounts receivable) ÷ 2, or the ending balance when no beginning is given. |

## Method

Average accounts receivable = (beginning + ending) ÷ 2 (ending alone when no beginning is given). Turnover = net credit sales ÷ average accounts receivable. Days’ sales in receivables = 365 ÷ turnover = average accounts receivable ÷ net credit sales × 365.

## Assumptions

- Net credit sales cover one year, the year the two balances start and end; the year has 365 days.
- Arithmetic is exact on the typed decimals; both results show to 2 decimals, halves up.

## Worked examples

1. sales = $400,000.00, bar = $70,000.00, ear = $90,000.00 gives turnover = 5, days = 73, average = $80,000.00. Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (turnover = net credit sales ÷ average accounts receivable; days’ sales in receivables = 365 ÷ turnover). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios: 400,000 ÷ ((70,000 + 90,000) ÷ 2) = 5 times.
2. sales = $550,000.00, bar = $50,000.00, ear = $80,000.00 gives turnover = 8.461538, days = 43.136364. Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (turnover = net credit sales ÷ average accounts receivable; days’ sales in receivables = 365 ÷ turnover). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios: 550,000 ÷ 65,000 = 8.46 times.
3. sales = $450,000.00, bar = $90,000.00, ear = $85,000.00 gives turnover = 5.142857, days = 70.972222. Source: OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios (turnover = net credit sales ÷ average accounts receivable; days’ sales in receivables = 365 ÷ turnover). https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios: 450,000 ÷ 87,500 = 5.14 times.
4. sales = $400,000.00, ear = $80,000.00 gives turnover = 5, days = 73.

## FAQ

### What is accounts receivable turnover?

Accounts receivable turnover counts how many times a year a company collects its average receivables, the money customers owe for sales on credit. A higher number means customers pay faster.

### How do I calculate accounts receivable turnover?

Divide net credit sales by the average accounts receivable. The average is the starting balance plus the ending balance, divided by 2. Billie's Watercraft Warehouse had $400,000 of credit sales and receivables of $70,000 and $90,000, so its turnover was 400,000 ÷ 80,000 = 5.

### What are the days' sales in receivables?

It is the average number of days a company waits to be paid for a credit sale: 365 divided by the turnover. A turnover of 5 means 365 ÷ 5 = 73 days. It is the same idea as days sales outstanding (DSO).

### What if I do not know credit sales?

Many income statements show only total net sales. Use net sales in that case, and use the same choice when you compare companies or years. Cash sales make the turnover look higher.

### Why does my answer differ from the textbook by a little?

Textbooks often round the turnover first and then divide 365 by the rounded number. This calculator keeps every digit until the end. For $450,000 of sales on $87,500 of average receivables, it shows 70.97 days, not the 71.01 days you get from 365 ÷ 5.14.

### Is a higher turnover always better?

Usually it means collections are quick and cash comes in sooner. A very high number can also mean credit terms are so strict that some customers buy elsewhere. Compare with the payment terms you offer and with similar businesses.

## Sources

- OpenStax, Principles of Accounting, Volume 1, 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios: accounts receivable turnover = net credit sales ÷ average accounts receivable, average = (beginning + ending) ÷ 2, number of days' sales in receivables = 365 ÷ turnover, and the Billie's Watercraft Warehouse and Company A and B examples. https://openstax.org/books/principles-financial-accounting/pages/9-3-determine-the-efficiency-of-receivables-management-using-financial-ratios (retrieved 2026-10-18)
- OpenStax, Principles of Finance, 6.2 Operating Efficiency Ratios: the same turnover formula, with net sales in place of credit sales when credit sales are not reported. https://openstax.org/books/principles-finance/pages/6-2-operating-efficiency-ratios (retrieved 2026-10-18)