Finance Formulas / July 19, 2018 / Alia Marquez
Accounts receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Said another way, account receivable are amounts of money owed by customers to another entity for goods or services delivered or used on credit but not yet paid for by clients.
Conversely, firms in sectors, such as utilities and telecommunications, which have large asset bases will have lower asset turnover. Since this ratio can vary widely from one industry to the next, considering the asset turnover ratios of a retail company and a telecommunications company will not make for an accurate comparison. Comparisons are only meaningful when they are made for different companies within the same sector.
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