What Is the AR Turnover Ratio?
The Accounts Receivable Turnover Ratio measures how many times per period a company collects its average accounts receivable balance:
AR Turnover = Net Credit Sales ÷ Average Accounts Receivable
A ratio of 12× means the company effectively collects its entire receivables balance 12 times per year — roughly every 30 days.
AR Turnover vs DSO
Both metrics measure collection speed from different angles:
| AR Turnover | Equivalent DSO |
|---|---|
| 18× | ~20 days |
| 12× | ~30 days |
| 8× | ~45 days |
| 6× | ~60 days |
| 4× | ~90 days |
DSO = 365 ÷ AR Turnover
How to Calculate Average AR
For a single quarter: (Beginning AR + Ending AR) ÷ 2
Example: - Q3 starting AR: $120,000 - Q3 ending AR: $150,000 - Average AR: $135,000 - Q3 net credit sales: $540,000 - AR Turnover (annualized): ($540,000 × 4) ÷ $135,000 = 16× - Equivalent DSO: 365 ÷ 16 = 22.8 days
AR Turnover Benchmarks by Industry
| Industry | Typical AR Turnover | Typical DSO |
|---|---|---|
| SaaS (subscription) | 18–52× | 7–20 days |
| Professional services | 6–10× | 36–60 days |
| B2B manufacturing | 5–8× | 45–73 days |
| Construction | 4–7× | 52–91 days |
| Healthcare | 5–9× | 40–73 days |
Calculate your AR turnover and DSO at the Days Sales Outstanding Calculator.