An accounting term which describes a company’s efficiency in extending credit to its customers and collecting its debts. A high Receivables Turnover ratio indicates that a business has efficient credit and collection policies (or that it deals in cash). Conversely, a low ratio indicates it is not properly assessing the creditworthiness of its customers, and/or that collection procedures are inefficient. The ratio is measured via the following formula:

Net credit sales ÷ Average accounts receivable

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