It can help in understanding the credit policy of a company and its bargaining power among its customers.Source: s2. Advantages and Disadvantages of ART Ratioīelow are some pros and cons of the ART ratio, which are as follows – Advantages collected its receivable 86.6 times during 2018, which is in line with its business which involves relatively low accounts receivable. Average Receivable = ($5,835 million + $5,614 million) / 2Īccounts Receivable Turnover Ratio = Net Sales / Average Receivable.for the year 2018.Īverage Receivables is calculated by using the formula given belowĪverage Receivable = (Opening Receivable + Closing Receivable)/2 Therefore, calculate the accounts receivable turnover ratio of Walmart Inc. According to its latest annual report (2018), the company booked net sales of $495,761 million, while the opening receivable (net) and the closing receivable (net) stood at $5,835 million and $5,614 million, respectively. in order to calculate the accounts receivable turnover ratio. Now, let us take the example of Walmart Inc. managed to collect its receivable 12.94 times during 2018. It is calculated by using the formula given belowĪccounts Receivable Turnover Ratio = Net Sales / Average Accounts Receivable Average Accounts Receivable = $20,530 million.
Average Accounts Receivable = ($17,874 million + $23,186 million) / 2.
Based on the given information, calculate the accounts receivable turnover ratio for Apple Inc. During the same period, the opening accounts receivable (net) and the closing accounts receivable (net) stood at $17,874 million and $23,186 million, respectively. The company reported net sales of $265,595 million for the year 2018. to illustrate the concept of the ART Ratio. Therefore, the company was able to collect its receivable 2.94 times during the year.
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