Total receivables turnover

Total receivables turnover is a financial metric that measures how efficiently a company collects its accounts receivable. It indicates how many times a company can convert its receivables into cash over a specific period, reflecting the effectiveness of its credit policies and collection efforts. A higher turnover ratio suggests that the company is efficient in collecting its outstanding debts, while a lower ratio may indicate issues with credit management or customer payment practices.

Total receivables turnover = Total revenue / Two fiscal period average of Total receivables, net

Two fiscal periods average means the average value between two comparable periods: for years it is the last two years, for half-years it is H1 2024 and H1 2023, for quarters it is Q2 2024 and Q2 2023. For quarterly and semi-annual periodicity values, the TTM value of Total revenue (sum of the last 4 quarters) is used in the numerator.

If the denominator is negative, the formula will return an empty value.

Total receivables turnover is valuable to investors as it provides insight into a company's liquidity and operational efficiency. A high turnover ratio can signal strong cash flow management and effective credit control, which are essential for maintaining financial health. Investors often use this metric to compare companies within the same industry, as it can highlight those that are better at managing their receivables.

However, it is important to consider this metric in conjunction with other financial indicators to gain a comprehensive understanding of a company's overall performance and risk profile.