Enter the total net credit sales and average accounts receivable over the same time period to determine the accounts receivable turnover ratio.

## Accounts Receivable Turnover Ratio Formula

The following equation can be used to calculate the accounts receivable turnover ratio.

ART Ratio = NCS / AR

- Where ART is the accounts receivable turnover ratio
- NCS is the net credit sales
- AR is the average accounts receivable

## Example

How to calculate accounts receivable turnover ratio?

**First, determine the total net credit sales.**In the time period being analyzed (most often a year long period) calculate the total net credit sales.

**Next, determine AAR.**Determine the average accounts receivable over the same time period.

**Finally, calculate the accounts receivable turnover ratio.**Calculate the ART Ratio using the information from steps 1 and 2 along with the formula presented above.

## FAQ

**What is an accounts receivable turnover ratio?**

An accounts receivable turnover ratio is a ratio of the total net sales to the accounts receivable. In other words, this ratio is a measure of how efficiently the company is collecting revenue.

**What are net credit sales?**

Net credit sales are all sales of goods where the revenue or payment is collected at a later date.

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