1. What Is Accounts Receivable Turnover Days?

Accounts Receivable Turnover Days measures the average number of days it takes a company to collect payment from its customers after a sale has been made. It indicates the efficiency of a company's credit and collection policies.

2. How Does the Calculator Work?

The calculator uses the Accounts Receivable Turnover Days formula:

Where:

• \( Days \) — Accounts Receivable Turnover Days
• \( ART \) — Accounts Receivable Turnover ratio (unitless)
• \( 365 \) — Number of days in a year

Explanation: This calculation converts the accounts receivable turnover ratio into the average number of days it takes to collect receivables.

3. Importance of Accounts Receivable Turnover Days

Details: This metric is crucial for assessing a company's liquidity and efficiency in collecting outstanding credit. A lower number indicates faster collection of receivables, while a higher number may signal collection problems.

4. Using the Calculator

Tips: Enter the Accounts Receivable Turnover ratio (typically calculated as Net Credit Sales divided by Average Accounts Receivable). The value must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Accounts Receivable Turnover Days value?
A: Ideal values vary by industry, but generally, a lower number (30-45 days) indicates efficient collections, while higher values (60+ days) may indicate collection issues.

Q2: How does this relate to the cash conversion cycle?
A: Accounts Receivable Turnover Days is a key component of the cash conversion cycle, which measures how long it takes to convert inventory investments into cash.

Q3: Can this metric be compared across industries?
A: Comparison is most meaningful within the same industry, as payment terms and business models vary significantly across different sectors.

Q4: What factors can affect this ratio?
A: Credit policies, collection efficiency, customer payment behavior, economic conditions, and industry norms can all impact this metric.

Q5: How often should this metric be monitored?
A: Businesses should track this metric regularly (monthly or quarterly) to identify trends and address collection issues promptly.