The receivables turnover ratio is an activity ratio computing how proficiently a firm uses its assets.
Receivables turnover ratio can be calculated by: net value of credit sales during a given period divided by the average accounts receivables.
Receivables turnover = sales / receivable
= 4,515,830 / 336,500
= 13.42
Days’ sales in receivables = 365 days/ receivable turnover
= 365 / 13.42
= 27.20
The average collection period is 27.20 days.
