Accounting: what is turnover???

tbradford
Fri, 31 Oct 2008 16:31:52 +0000

From the link above:

"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 firm."

I’m not sure what other type of explanation you’re looking for. Whether or not the ratio is “good” can depend on a lot of things and can depend on the firm or industry and is more easily evaluated by looking at the company’s trend.

Basically, the higher the ratio, the faster the company is at collecting their recievables.