1. What is Accounts Receivable Turnover Days?

Accounts Receivable Turnover Days measures the average number of days it takes a company to collect payment from its customers after a sale. It's an important metric for assessing a company's efficiency in collecting receivables.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Turnover Ratio} \) — Net credit sales divided by average accounts receivable
• \( 365 \) — Number of days in a year

Explanation: The formula converts the accounts receivable turnover ratio into days, showing how long it takes on average to collect payments.

3. Importance of AR Turnover Days

Details: This metric helps businesses understand their cash flow cycle, assess credit policies, and compare collection efficiency with industry standards.

4. Using the Calculator

Tips: Enter your accounts receivable turnover ratio (must be greater than 0). The result shows the average collection period in days.

5. Frequently Asked Questions (FAQ)

Q1: What is a good AR turnover days number?
A: It varies by industry, but generally lower numbers are better, indicating faster collection. Compare with industry averages for context.

Q2: How is turnover ratio calculated?
A: Turnover ratio = Net credit sales / Average accounts receivable (beginning AR + ending AR divided by 2).

Q3: Why use 365 days?
A: This standardizes the calculation to an annual basis regardless of the actual period measured.

Q4: What if my ratio is very high?
A: Extremely high ratios (very low days) might indicate overly strict credit policies that could limit sales.

Q5: How often should this be calculated?
A: Most businesses calculate this quarterly or annually to track trends in collections efficiency.