![]() ![]() Below is a chart of Apple’s historical A/R turns compared to Amazon and Google: Comparison between Apple Inc., Google and Amazon's accounts receivable turnover ratio using the Charting Tool In Summary Let’s get an idea of Apple’s accounts receivable turnover compared to a couple of its competitors. ![]() Which you would then use to calculate A/R turns: Using the formulas we outlined above, you would first calculate average accounts receivable:ġ6,814,000 = (17,874,000 + 15,754,000) / 2 During FY2017 they also reported net sales on credit of $229,234,000. (AAPL) reported net accounts receivable of $17,874,000 and $15,754,000 at Septemand 2016, respectively. Let’s take a look at a quick example (numbers in thousands, $USD):Īpple Inc. An example of the accounts receivable turnover ratio ![]() If you're interested in learning more about financial ratio analysis, we've covered this framework in greater detail here. Knowing where to start and how to complete your analysis prevents some people from ever getting started. Why you ask? Because customers are making purchases and paying the company very quickly, which means better cash management for the company!Īnalyzing financial ratios can be difficult. In this scenario, the company’s A/R turnover ratio would be high. They never haggle on credit terms, and they are never a day late in making payments.īecause of this, the company offers credit terms of ten days. To break it down further, let’s say a company has amazing customers. The worst case scenario is that a company could have money due from customers that is never paid! We can all agree that investing in a company that doesn’t get paid by its customers is a bad idea. It could also mean the company isn’t investing enough resources into growing their collections department. This could be an indicator that the company’s customers aren’t paying for products or services that were already delivered. By collecting cash more quickly a business can reinvest that cash to generate additional returns for shareholders.īe careful if a company's A/R turns are low, or slowing compared to the company’s historical turnover ratio. A higher ratio indicates a company is collecting cash from customers quickly. In most cases, the higher the ratio, the better.
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