Receivables turnover shows how fast a company collects what it's owed.
▶ Watch: Receivables Turnover explained in 24 seconds
What it is
Receivables turnover counts how many times in a period a company collects its average outstanding customer balances. It is revenue divided by average accounts receivable. A higher number means the company collects its credit sales more often and more quickly.
Why it matters
Efficient collection frees up cash and lowers the risk of bad debts, while a declining ratio can flag weaker customers or looser credit terms. It is the same information as days sales outstanding expressed as a frequency rather than a number of days. Used together, the two give a full picture of collection efficiency.
How it's calculated
Divide total credit revenue by average accounts receivable; days sales outstanding then equals 365 divided by the turnover figure.
How Quintarthai uses it
Revenue and accounts receivable for this ratio are on the Financials tab of a company deep-analysis page, alongside the related collection metrics.
Cross-border note. Like DSO, receivables turnover is a unit-free frequency, so US and Canadian companies are directly comparable as long as you stay within the same industry.
FAQ
How is receivables turnover different from DSO?
They describe the same thing from two angles. Receivables turnover is how many times a year you collect; DSO is how many days each collection takes. DSO equals 365 divided by receivables turnover.
Should the numerator be total revenue or credit revenue?
Ideally credit (on-account) revenue, since only credit sales create receivables. In practice total revenue is often used because the credit-only figure is rarely disclosed; just apply the same choice consistently.
Check your understanding
How is receivables turnover related to days sales outstanding (DSO)?
They are two views of the same thing: receivables turnover is how many times a year you collect, and DSO (= 365 ÷ turnover) is how many days each collection takes.