Fundamental Glossary / Working Capital & Operational Efficiency
Debtor Turnover Ratio
How many times receivables are collected during a period.
Formula
Revenue / average trade receivables. Cash sales should be left out of the numerator if you know them.
What it means
Debtor turnover is the collection speed of credit sales. A turnover of 6 means the book is collected about six times a year, roughly 60 days.
It is the companion of receivable days. Days are easier to picture. Turnover is the same fact as a multiple.
How to read it
A falling turnover means customers are taking longer, or the company is booking sales it is not collecting. Either one consumes cash.
What to watch
Factoring receivables removes them from the books and flatters the turnover. Check the note before you praise a sudden improvement.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.