What is Rec Turn?
Measures how efficiently a company collects its receivables (money owed by customers).
Think of it like this
Like measuring how quickly your friends pay you back after lending them money.
Formula
Receivables Turnover = Revenue ÷ Average Accounts Receivable- Revenue: Net credit sales (or total revenue)
- Average A/R: (Beginning + Ending Receivables) ÷ 2
Why it matters
- Shows effectiveness of credit and collection
- Higher = faster collection of payments
- Affects cash flow and working capital
- Can indicate customer financial health
What's a good value?
< 5x
Low
Slow collection, potential bad debts
5-10x
Moderate
Average collection efficiency
10-15x
Good
Efficient collection practices
> 15x
Excellent
Very fast collection or mostly cash sales
Real-world example
Declining receivables turnover may signal customers are struggling to pay or looser credit terms.
Screen US stocks by Rec Turn in the app, and see which companies pass right now.