{"id":49,"date":"2024-05-20T09:36:50","date_gmt":"2024-05-20T09:36:50","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=49"},"modified":"2024-05-21T06:41:50","modified_gmt":"2024-05-21T06:41:50","slug":"receivables-turnover-ratio","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/receivables-turnover-ratio\/","title":{"rendered":"Receivables Turnover Ratio"},"content":{"rendered":"<p class=\"wp-block-paragraph\">Frequently, enterprises are obligated to grant credit to their customers, allowing the latter to obtain the merchandise without promptly settling the accompanying invoices. It is incumbent upon the management of a corporation to ensure that any outstanding receivables are collected within the designated timeframe; failure to do so will result in a negative impact on the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/cash-flow\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">cash flow<\/a> of the business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The approach employed to assess the effectiveness with which receivables are collected and such debts are extended is referred to as the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/receivables-turnover-ratio\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">receivables turnover ratio<\/a>. Asdicated by the receivables ratio, a business&#x2019;s ability to manage these short-term credits is determined.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The accounts receivable turnover ratio is an alternative name for this efficacy metric, in addition to receivables turnover.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Formula in Mathematics Denoting the Receivables Turnover Ratio<br>Two key variables&#x2014;average accounts receivable and net credit sales&#x2014;are crucial in determining the receivables turnover ratio for a specific organization. This <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/yield\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">yield<\/a>s the formula for the receivables turnover ratio:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Receivables turnover ratio = average accounts receivable divided by net credit sales<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The average accounts receivable can be calculated by adding the accounts receivable at the start and end of the given period and then dividing the result by two.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To illustrate, in order to calculate the receivables turnover ratio for the second quarter of a specific year, it is necessary to aggregate the tangible receivables at the beginning and end of this quarter prior to dividing the result by 2.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a similar vein, net credit sales pertain to the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/revenue\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">revenue<\/a> produced by credit-completed sales su<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/bse\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>bse<\/a>quent to the deduction of customer returns. Thus,<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Customer returns minus gross credit sales equals net credit sales.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Frequently, enterprises are obligated to grant credit to their customers, allowing the latter to obtain the merchandise without promptly settling the accompanying invoices. It is incumbent upon the management of a corporation to ensure that any outstanding receivables are collected within the designated timeframe; failure to do so will result in a negative impact on [&#x2026;]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-49","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Frequently, enterprises are obligated to grant credit to their customers, allowing the latter to obtain the merchandise without promptly settling the accompanying invoices. It is incumbent upon the management of a corporation to ensure that any outstanding receivables are collected within the designated timeframe; failure to do so will result in a negative impact on&hellip;","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/49","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/49\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=49"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}