The average gross receivables turnover is the ratio of net credit sales to average gross receivables. Generally Accepted Accounting Principles require companies to report the gross receivables ...

These two ratios appear in the current assets category of a business's balance sheet. Key Takeaways Accounts receivable turnover indicates how effective a company is at collecting on debts owed to it.

For example, a company with an inventory-receivables turnover ratio of 10 would have an average collection period of 365 divided by 10, or approximately 36.5 days.

sales / receivables = receivables turnover Example: Suppose an organization's total annual sales are $1.14 million, and the average accounts receivable for that year are $95,000. The calculation is: ...

Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit.

Accounts receivables are recorded as current assets on a company's balance sheet because the cash from the transaction is typically forthcoming in under one year.