Many companies also have Notes Receivables. Part of them are from Custmors paying their A/R, so debit N/R and credit A/R. My questions is if A/R balance need to be adjusted for calculating A/R turnover ratio? Thanks.
ustcer, Think of notes receivable as short term loans payable to the company and accounts receivable as trade credit extended to customers. Most customers will use trade credit with prespecified terms for payments. Notes receivable can contain things outside of regular business operations.
I think if you knew with certainty that they were just taking on NR to replace the Trade AR, you could include that in the DSO.