Accounts Receivable Turnover Law and Legal Definition
Accounts receivable turnover is the ratio of annual credit sales to average accounts receivable. It is obtained by dividing total credit sales by accounts receivable. It is a degree of realization risk in accounts receivable. It is calculated to measure how quickly customers pay their bills. Lower the accounts receivable turnover rate, the longer receivables are being held-and the less likely they are to be collected.
