Receivables turnover measures how quickly a company collects cash from its credit customers. It divides trailing twelve-month revenue by average accounts receivable. A higher ratio means the company is collecting more efficiently. A declining ratio may indicate loosening credit terms, deteriorating customer quality, or collection problems.
Receivables Turnover = Revenue (TTM) / Average Accounts Receivable
GeminIQ uses TTM net revenue divided by the average of current and year-ago receivables from the balance sheet, both sourced from SEC filings.
A: It depends on the company's credit terms. A company offering net-30 terms should have receivables turnover around 12 (collecting monthly). Net-60 terms imply turnover around 6. Ratios significantly below what the credit terms suggest may indicate collection problems.
A: Days Sales Outstanding (DSO) is 365 divided by receivables turnover. It tells you the average number of days between a sale and when cash is collected. Both metrics tell the same story.
A: Some platforms use gross receivables, others use net receivables (after allowance for doubtful accounts). GeminIQ uses Accounts Receivable Net as reported in the filing.
Now put it to work. Screen every US public company by Receivables Turnover.
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