How To Calculate Accounts Receivable Turnover in Oracle | Arithmix

Calculating accounts receivable turnover is an important metric for any business, as it helps to measure the efficiency of the company's credit and collection policies. The formula for calculating accounts receivable turnover is straightforward: divide the net credit sales by the average accounts receivable balance for the period being measured.

Net credit sales refer to the total amount of sales made on credit, minus any returns or allowances. The average accounts receivable balance is calculated by adding the beginning and ending accounts receivable balances for the period and dividing by two.

For example, if a company had net credit sales of $500,000 and an average accounts receivable balance of $100,000 for the month of January, the accounts receivable turnover would be 5. This means that the company collects its outstanding accounts receivable balance five times per year.

What Is Accounts Receivable Turnover?

Accounts receivable turnover is a financial ratio that measures how efficiently a company is able to collect its outstanding accounts receivable balance. It is an important metric for any business that extends credit to its customers, as it helps to identify potential cash flow issues and assess the effectiveness of the company's credit and collection policies.

A high accounts receivable turnover ratio indicates that a company is able to collect its outstanding accounts receivable balance quickly, which is generally seen as a positive sign. On the other hand, a low accounts receivable turnover ratio may indicate that a company is having difficulty collecting its outstanding accounts receivable balance, which could be a sign of potential cash flow issues.

When Is It Valuable To Calculate Accounts Receivable Turnover?

Calculating accounts receivable turnover is valuable for any business that extends credit to its customers, as it helps to identify potential cash flow issues and assess the effectiveness of the company's credit and collection policies. It is particularly valuable for businesses that have a large volume of credit sales or that have a high level of outstanding accounts receivable balance.

By calculating accounts receivable turnover on a regular basis, businesses can identify trends and make adjustments to their credit and collection policies as needed. For example, if a business has a low accounts receivable turnover ratio, it may need to tighten its credit policies or improve its collection efforts in order to improve cash flow and reduce the risk of bad debt.

Overall, calculating accounts receivable turnover is a valuable tool for any business that wants to improve its cash flow and ensure that it is collecting its outstanding accounts receivable balance efficiently. By understanding this important financial ratio and making adjustments as needed, businesses can improve their financial health and position themselves for long-term success.

How Do You Calculate Accounts Receivable Turnover in Oracle

Oracle itself isn’t naturally geared towards letting you calculate complex metrics like Accounts Receivable Turnover. As an alternative, teams typically use products like Arithmix to import data from Oracle and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Oracle, combine it with data from other systems, and create calculations like Accounts Receivable Turnover.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Accounts Receivable Turnover in Arithmix

Calculating metrics like Accounts Receivable Turnover is simple in Arithmix. Once you've created your free account, you’ll be able to import your Oracle data, and use it to create natural language formulas for metrics like Accounts Receivable Turnover.

Arithmix is designed to give you the power to build any calculations you want on top of your Oracle data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.