Accounts receivable turnover rate (annualized)
factor.formula
Accounts receivable turnover rate (annualized):
Average accounts receivable:
The formula is used to calculate the annualized accounts receivable turnover ratio, which measures the number of times a company turns over its accounts receivable in one year by dividing its operating income for the most recent 12 months by its average accounts receivable.
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Refers to the company's cumulative operating income in the last 12 months, that is, the total revenue for the rolling 12 months, which reflects the company's sales scale and operating conditions in the most recent financial year. Using TTM data can eliminate seasonal effects and more accurately reflect the company's actual operating conditions. This data usually comes from the company's financial statements.
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Refers to the average of the accounts receivable at the beginning and end of the calculation period (usually one year). It reflects the average accounts receivable balance of the enterprise during the entire inspection period. The average value is used to more accurately reflect the level of accounts receivable throughout the period and avoid the impact of extreme values of accounts receivable at the end or beginning of the period on the calculation results. This data usually comes from the balance sheet of the enterprise.
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Refers to the balance of accounts receivable at the beginning of the inspection period, usually refers to the amount of accounts receivable at the beginning of the year or a certain accounting period. This data comes from the company's balance sheet.
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Refers to the balance of accounts receivable at the end of the inspection period, usually refers to the amount of accounts receivable at the end of the year or at the end of a certain accounting period. This data comes from the company's balance sheet.
factor.explanation
Accounts receivable turnover rate (annualized) is used to measure the speed and efficiency of cashing out accounts receivable of an enterprise. The higher the index is, the faster the company's sales collection speed is, the higher the efficiency of accounts receivable management is, the relatively lower the risk of bad debts is, and the higher the efficiency of working capital utilization is. A low index may indicate that the company's collection speed is slow, the risk of bad debts is high, and more funds are occupied, affecting the company's operating efficiency. When analyzing, the industry average and the company's historical data should be compared to more comprehensively assess the company's financial health and management capabilities. At the same time, it should be noted that this indicator itself cannot fully reveal all risks, such as whether it is overly dependent on credit sales and whether the accounts receivable structure is reasonable, which all need to be combined with other financial indicators and operating conditions for comprehensive analysis.