BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -A high ratio is desirable, as it indicates that the company’s collection of accounts receivable is frequent and efficient. A high accounts receivable turnover also indicates that the company enjoys a high-quality customer base that is able to pay their debts quickly.

Detailed explanation-2: -What Is a Good Accounts Receivable Turnover Ratio? Generally speaking, a higher number is better. It means that your customers are paying on time and your company is good at collecting.

Detailed explanation-3: -A high accounts receivable turnover ratio is a positive sign for the business, while a low ratio is a poor sign. A high turnover ratio indicates that the business has a high percentage of customers who are converting their outstanding debt into payments. That is, they are paying their bills in a timely manner.

Detailed explanation-4: -Just because receivables are an asset doesn’t mean that high levels of them should uniformly be considered good. When a company has high levels of receivables in relation to its cash on hand, this often indicates lax business practices in collecting its debt.

Detailed explanation-5: -The higher a receivable turnover ratio, the better because it means your customers pay their invoices on time, and your company collects debts efficiently. A higher turnover ratio also illustrates a better cash flow and a more robust balance sheet or income statement.