Account Receivable Ratio Analysis

Account Receivable ratio analysis model is easy to follow financial template to calculate vital account receivable ratios for current year.

The model includes:

- Roll forward Account Receivable Balance Sheet Schedule;

- Average sales per day calculations;

- 12 months Total Credit Sale calculations;

- 12 months Average Credit Sale;

- 12 months Average Net A/R credit sale (12 months Net A/R average balance);

- A/R Turnover ratio calculations - how many times receivables were converted over into cash during 12 months period; the ratio is activity ratio that shows company effectiveness in extending credits as well as collecting it;

By maintaining accounts receivable, your business is indirectly extending interest-free loans to the clients. A high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient.

A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the company.

- # of Days in Receivables - how many days on average it takes to collect receivables

- Days Sales outstanding - monthly collection period