Accounts Receivable Turnover Calculator
Calculate AR turnover ratio and Days Sales Outstanding (DSO) to measure how efficiently a company collects receivables.
Results
What is it?
Accounts Receivable (AR) Turnover measures how many times per year a company collects its average AR balance. Days Sales Outstanding (DSO) converts this to the average number of days it takes to collect payment after a sale. Higher turnover and lower DSO indicate faster, more efficient collections.
How to use
Enter net credit sales for the period and accounts receivable balances at the beginning and end of the same period. The calculator computes average AR, turnover ratio, and DSO.
Example scenario
Net credit sales $2M, beginning AR $300k, ending AR $400k. Average AR = $350k. AR turnover = 5.7x. DSO = 64 days. The company collects the average invoice in about 2 months.
Pro tip
DSO benchmarks vary widely: net-30 terms should yield DSO around 35-45 days; DSO above 60 days suggests collection problems. Compare DSO to your stated payment terms: if customers take 75 days on net-30 invoices, tighten collections or review credit policies. Rapid DSO improvement can also release significant cash from working capital.