Accounts receivable turnover

/əˈkaʊnts rɪˈsivəbəl ˈtɜrnˌoʊvər/ noun

An efficiency ratio that measures how quickly a company collects its outstanding credit sales, calculated by dividing net credit sales by average accounts receivable. Higher turnover indicates faster collection and better credit management.

Formalized in the mid-20th century as businesses increasingly relied on credit sales, building on traditional credit management practices. The ratio evolved to help assess both the quality of receivables and the effectiveness of collection processes.

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