Read the formula and its variables
State whether S is total revenue or credit sales and keep period coverage matched.
| Input | Meaning |
|---|---|
| S | Sales flow under the stated convention |
| Average AR | Corresponding trade receivable base |
Inspect a stated example
A sales base of 500 and receivables 60 give 8.3333 period turnovers.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
A cash-sales-heavy business can give a different interpretation when total revenue is used as a proxy for credit sales.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.