Receivables Turnover

Revenue divided by average accounts receivable gives receivables turnover: how many times per year a company converts its outstanding invoices into cash. A turnover of 10 means the receivables book collects and refills ten times a year.

Turnover and DSO are the same fact in different units — 365 divided by turnover equals days sales outstanding — so use whichever reads better for the comparison at hand. Turnover suits cross-company screens; DSO suits the plain question of how long customers take to pay.

A declining turnover trend deserves the same suspicion as rising DSO: sales growth that outruns collections is growth being bought with credit.