The accounts receivable turnover ratio, calculated by dividing net credit sales by average accounts receivable, measures how efficiently a company collects its receivables. A higher ratio indicates faster collection of receivables, improving liquidity and cash flow. It reflects the effectiveness of a company's credit policies and collection processes. This ratio is important for management to assess the efficiency of credit management and for investors to evaluate the company$$s ability to convert sales into cash, ensuring that the company can sustain its operations without cash flow issues.