A financial health indicator of how efficiently a company is in collecting its revenues; and measures the number times the company has received its average accounts receivable balance within a fiscal year. This ratio is calculated by dividing revenues earned by a company by the average accounts receivable balance (i.e. average of accounts receivable at the beginning of the period and at the end of the period). Ideally the resulting ratio should be less than six to demonstrate that the company is collecting its bills. Classified as an activity ratio.