body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-container {
background-color: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 30px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-header {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.form-group {
margin-bottom: 20px;
}
.form-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.input-wrapper {
position: relative;
}
.input-prefix {
position: absolute;
left: 12px;
top: 50%;
transform: translateY(-50%);
color: #6c757d;
}
.form-control {
width: 100%;
padding: 12px 12px 12px 30px;
font-size: 16px;
border: 1px solid #ced4da;
border-radius: 4px;
box-sizing: border-box;
transition: border-color 0.15s ease-in-out;
}
.form-control:focus {
border-color: #4dabf7;
outline: none;
box-shadow: 0 0 0 3px rgba(77, 171, 247, 0.25);
}
.btn-calculate {
display: block;
width: 100%;
padding: 14px;
background-color: #228be6;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: 600;
cursor: pointer;
transition: background-color 0.2s;
margin-top: 10px;
}
.btn-calculate:hover {
background-color: #1c7ed6;
}
.result-box {
margin-top: 30px;
padding: 20px;
background-color: #fff;
border: 1px solid #dee2e6;
border-radius: 6px;
display: none;
}
.result-row {
display: flex;
justify-content: space-between;
align-items: center;
padding: 10px 0;
border-bottom: 1px solid #f1f3f5;
}
.result-row:last-child {
border-bottom: none;
}
.result-label {
font-weight: 500;
color: #6c757d;
}
.result-value {
font-weight: 700;
font-size: 1.2em;
color: #212529;
}
.highlight-result {
color: #228be6;
font-size: 1.5em;
}
.content-section {
margin-top: 40px;
}
h2 {
color: #2c3e50;
border-bottom: 2px solid #e9ecef;
padding-bottom: 10px;
margin-top: 30px;
}
h3 {
color: #495057;
margin-top: 25px;
}
.formula-box {
background-color: #e7f5ff;
padding: 15px;
border-left: 4px solid #228be6;
font-family: monospace;
font-size: 1.1em;
margin: 20px 0;
}
ul {
padding-left: 20px;
}
li {
margin-bottom: 10px;
}
function calculateART() {
// Get inputs
var netSalesInput = document.getElementById('net_credit_sales');
var begArInput = document.getElementById('beginning_ar');
var endArInput = document.getElementById('ending_ar');
var netSales = parseFloat(netSalesInput.value);
var begAR = parseFloat(begArInput.value);
var endAR = parseFloat(endArInput.value);
// Output elements
var resultBox = document.getElementById('result_output');
var displayAvg = document.getElementById('display_avg_ar');
var displayRatio = document.getElementById('display_ratio');
var displayDays = document.getElementById('display_days');
// Validation
if (isNaN(netSales) || isNaN(begAR) || isNaN(endAR)) {
alert("Please enter valid numeric values for all fields.");
resultBox.style.display = "none";
return;
}
if (netSales < 0 || begAR < 0 || endAR < 0) {
alert("Values cannot be negative.");
resultBox.style.display = "none";
return;
}
// Calculation Logic
// 1. Calculate Average Accounts Receivable
var avgAR = (begAR + endAR) / 2;
// Prevent division by zero
if (avgAR === 0) {
alert("Average Accounts Receivable cannot be zero. Please check your Beginning and Ending AR values.");
resultBox.style.display = "none";
return;
}
// 2. Calculate Turnover Ratio
var turnoverRatio = netSales / avgAR;
// 3. Calculate Days Sales Outstanding (DSO) – Standard 365 day year
var dso = 365 / turnoverRatio;
// Display Results
displayAvg.innerHTML = "$" + avgAR.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
displayRatio.innerHTML = turnoverRatio.toFixed(2);
displayDays.innerHTML = dso.toFixed(1) + " Days";
resultBox.style.display = "block";
}
How to Calculate Accounts Receivable Turnover Rate
The Accounts Receivable (AR) Turnover Ratio is an efficiency ratio used in financial analysis to quantify a company's effectiveness in collecting its receivables or money owed by clients. The ratio shows how well a company uses and manages the credit it extends to customers and how quickly that short-term debt is collected or being paid.
The Formula
To calculate the accounts receivable turnover rate, you need two primary figures: Net Credit Sales and the Average Accounts Receivable for the period.
AR Turnover Ratio = Net Credit Sales / Average Accounts Receivable
Where:
- Net Credit Sales: Sales where cash is collected at a later date. It is calculated as Gross Credit Sales minus Sales Returns and Allowances.
- Average Accounts Receivable: The sum of starting and ending accounts receivable over a time period (usually monthly, quarterly, or annually), divided by 2.
Average AR = (Beginning AR + Ending AR) / 2
Example Calculation
Let's assume a business, "TechWidgets Inc.", has the following financial data for the fiscal year:
- Net Credit Sales: $500,000
- Accounts Receivable at start of year (Jan 1): $40,000
- Accounts Receivable at end of year (Dec 31): $60,000
Step 1: Calculate Average AR
($40,000 + $60,000) / 2 = $50,000
Step 2: Calculate Turnover Ratio
$500,000 / $50,000 = 10.0
This means TechWidgets Inc. collected its average receivables 10 times during the year.
Interpreting the Results
The resulting number indicates the number of times per year that the company collects its average accounts receivable.
- High Ratio: A high turnover ratio generally implies that the company's collection of accounts receivable is efficient and that the company has a high proportion of quality customers who pay their debts quickly. However, an excessively high ratio might indicate the company's credit policy is too stringent, potentially causing it to miss out on sales opportunities.
- Low Ratio: A low turnover ratio may indicate poor collection processes, bad credit policies, or customers who are not financially viable or creditworthy. It suggests the company is struggling to convert sales into cash.
Average Collection Period (DSO)
The calculator also provides the "Average Collection Period," often referred to as Days Sales Outstanding (DSO). This metric converts the ratio into days, showing exactly how long it takes, on average, to collect a payment after a sale is made.
DSO = 365 / AR Turnover Ratio
In the example above, a ratio of 10 would result in a DSO of 36.5 days, meaning it takes the company roughly a month and a week to collect payment after a sale.