Accounts Receivable to Sales Ratio Help

The accounts receivable to sales ratio of a company is the ratio of the amount of money that company is owed by all of its customers to the total amount of money it's received from all completed sales. It can also be centered to one customer as the ratio of what one customer owes to the total amount of money received from all completed sales with that customer.

The point of obtaining/calculating this ratio is to follow changes (increases and/or decreases) in accounts receivable. If your ratio is always quite high and only gets higher, you may be losing or missing more money than your company can afford. It (a constant increase in the ratio) means that the accounts receivable grows more steadily than your total sales and since total sales are what you really make profit from, you're gaining less and less profit.

To use our Accounts Receivable to Sales Ratio calculator, enter the amount of money owed to you by accounts receivable in the box labeled "Accounts Receivable" and enter the amount of money you've received by completed sales in the box labeled "Sales." To get the ratio of the two, press "Calculate."

Works Cited
"Accounts Receivable to Sales Ratio." CCH Business Owner's Toolkit. 2006. CCH
     Incorporated. 17 July 2006. <http://www.toolkit.cch.com/text/P06_4216.asp>.