Accounts receivable turnover ratio (1 Viewer)

[Roga]

I'm getting two different ratios from two different textbooks. One says:

Sales/Accounts receivable while the other says Accounts receivable/(Sales/365). Which one is the correct one?

 

[dtmur]

Credit.Sales./Average Acounts recievable x 365 answer should be less than 30 days

CS/A.A.R

Chris Sat/American Andrews Rissole

 

[Rampager]

Accounts receivable/(Sales/365). This one is correct, you can write this as.

Accounts Receivable
-------------------------- x 365 = Average number of days.
Sales

Example:

1000
------ x 365 = 73, it takes 73 days on average for accounts receivable to be collected.
5000


===============Alternatively

365/ (Sales/Accounts) gives you the same answer

365 / (5000/1000) = 73 days.