Accounting › Section H · Accounting for receivables › Topic H.3
Receivables ratios and management
A sale on credit is only half finished until the cash arrives. Two ratios show how quickly a company turns its receivables into cash, and they warn managers, lenders and investors when collections start to slip.
In this topic
- Why collection speed matters
- The accounts receivable turnover ratio
- Days' sales in receivables
- Worked example: two years of ratios
- Worked example: what the slowdown costs
- Reading the ratios with care
- Managing receivables
- Common mistakes to avoid
- Key takeaways
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