AR Ratio

The Accounts Receivable (AR) Ratio widget provides a comprehensive view on receivable ratio for a specific period.

The Accounts Receivable ratio indicates if the company effectively collects the receivables from the customer. A low ratio is a key indicator for the correction in the collection process, credit policies, or the financial viability of the customer.

Account Receivable Ratio Calculation

Receivable Turnover Ratio = Net Credit Sales / Average Account Receivables

Average Account Receivables = (Opening Account Receivables + Closing Account Receivables) / 2

For example

The gross sales of a shop are $100,000. A starting (opening) accounts receivable for the year is $10,000. Ending (Closing) accounts receivables for the year is $15,000. The calculation of AR ratio:

Accounts Receivable Turnover Ratio = $100,000 - $10,000 / ($10,000 + $15,000)/2 = 7.2

The widget retrieves information from the Taxonomies (tfgld1170m000) and tfgld1670m000 session in Infor LN to calculate the accounts receivable ratio. The Taxonomies (tfgld1670m000) session in Infor LN is used to map the accounts for this widget. The widget displays a graphical representation based on the calculated value for the selected period.
Note: 
  • You can select the Include Non-Finalized Transaction check box on the Configure Widget screen in the Selection widget to include the amounts that are not finalized.
  • The GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) accounting rules are applied.
On the widget header, you can:
  • View the Company name.
  • Select the Company name to view the details of the widget configuration.
  • Click Dropdown to modify the period. A line graph displays a monthly receivable for the fiscal year if YTD option is selected. A bar chart displays the receivable ratio for the selected month and previous month if the MTD option is selected.
  • Rest the pointer on the graph to view the exact value.