Accounts receivable turnover
factor.formula
Accounts receivable turnover:
Average accounts receivable:
in:
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The total operating revenue of the last 12 months (rolling year). TTM (Trailing Twelve Months) means using the data of the past 12 months for calculation, which can reflect the recent operating conditions of the company more timely. Using rolling annual data can eliminate the impact of seasonal fluctuations on indicators and provide a more stable basis for analysis.
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The average accounts receivable balance within the calculation period (usually one year) is used to smooth the fluctuations in accounts receivable balances caused by the end of the month, the end of the quarter or other special time points. It more accurately reflects the average accounts receivable utilization level of the company throughout the calculation period.
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Calculate the accounts receivable balance at the beginning of the period, for example, the accounts receivable balance at the beginning of the year.
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Calculate the accounts receivable balance at the end of the period, such as the accounts receivable balance at the end of the year.
factor.explanation
Accounts receivable turnover rate is a key indicator to measure the efficiency of accounts receivable management of enterprises. This indicator reflects the speed at which accounts receivable of an enterprise are converted into cash within a certain period of time (usually one year). A higher turnover rate means that the enterprise recovers accounts receivable quickly, has good capital liquidity, high operating efficiency, and low bad debt risk. A lower turnover rate may imply that the enterprise has difficulty in recovering accounts receivable, slow capital turnover, and high bad debt risk. This indicator is also affected by industry characteristics, and there are differences in turnover levels in different industries. Industry differences need to be considered when making cross-industry comparisons.