Given the information for Orca's industries, Orca's accounts receivable turnover is 11.2
Receivable turnover is an example of an activity ratio. Activity ratios are financial ratios that measure the efficiency with which a firm performs its daily tasks. Other activity ratios are Current ratio, Quick ratio, asset turnover ratio and inventory ratio.
Receivable turnover measure the efficiency with which a firm converts its receivables to revenue. receivable turnover is the ratio of revenue and average receivables.
Receivable turnover = revenue / average receivable
Average receivable = (6,000 + 1,500) / 2 = $3,750
Revenue = $42,000
Receivable turnover = $42,000 / $3,750 = 11.2
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