Net sales / Average accounts receivable

When a company sells on credit, the level of its receivables is related to the level of sales. A relatively low rate might be due to an overextension of credit, to an inability of customers to pay, or to a poor collection job. A relatively high rate may indicate a strict credit extension policy or a reluctance or inability to extend credit. This ratio helps identify recent increases (decreases) in accounts receivable.

Current Ratio
Days in Inventory
Days in Account Payable
Days in Receivable

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