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Click Ratio Name For More Information
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Sales / Receivables
What it measures
This ratio measures the number of times your
accounts receivable turn over during the year. This should be calculated
on a monthly basis.
How is the sales / receivables
calculated
Divide total sales for the year by the
accounts receivable balance. The total sales can be calculated for any
time during the year by dividing year-to-date sales by the number of months that
have closed in the current fiscal year and then multiplying by 12.
For example, it is 7 months into your year.
Total sales year to date is $1,750,000 and the accounts receivable balance is
$275,000.
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1,750,000 / 7 = 250,000 (average monthly sales)
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250,000 * 12 = 3,000,000 (projected yearly sales)
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3,000,000 / 275,000 = 10.91 (sales /
receivables ratio)
Target
The target for the sales / receivables is
10.95.
How to improve your sales /
receivables ratio
A low ratio indicates that you may need to
step up your collection activities for outstanding accounts receivable.
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