Accounts Receivable Calculator
AR Turnover Ratio
Calculate how efficiently receivables are collected
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Days Sales Outstanding
Calculate the average number of days to collect payment
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Collection Effectiveness Index
Measure how effectively outstanding receivables are collected
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Formula
AR Turnover = Net Credit Sales / Average AR | DSO = (AR / Credit Sales) × Days in Period | CEI = (Beginning AR + Sales - Ending AR) / (Beginning AR + Sales - Current AR) × 100
Frequently Asked Questions
What is a good AR turnover ratio?
Higher is better. 10-12x (collecting every 30-36 days) is considered good. Above 12x is excellent. Below 6x (60+ days) suggests collection problems. Compare against industry benchmarks and your payment terms.
What does Days Sales Outstanding (DSO) tell you?
DSO measures the average days to collect payment after a sale. If your payment terms are Net 30, a DSO of 35-40 days is normal. A DSO significantly above your terms indicates slow collection.
How can I improve AR turnover?
Invoice promptly, offer early payment discounts (e.g., 2/10 Net 30), implement clear credit policies, follow up on overdue accounts quickly, use automated reminders, and consider factoring for chronic late payers.
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