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GuruFocus has detected 5 Warning Signs with Analog Devices Inc \$ADI.
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Accounts Receivable
\$473 Mil (As of Jan. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Analog Devices Inc's accounts receivables for the quarter that ended in Jan. 2017 was \$473 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Analog Devices Inc's Days Sales Outstanding for the quarter that ended in Jan. 2017 was 43.80.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Analog Devices Inc's Liquidation Value for the quarter that ended in Jan. 2017 was \$1,957 Mil.

Definition

Accounts Receivable is money owed to a business by customers and shown on its Balance Sheet as an asset.

Explanation

1. Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Days sales outstanding measures of the average number of days that a company takes to collect revenue after a sale has been made. It is a financial ratio that illustrates how well a company's accounts receivables are being managed.

Analog Devices Inc's Days Sales Outstanding for the quarter that ended in Jan. 2017 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 472.511 / 984.449 * 91 = 43.80

2. In Ben Grahams calculation of liquidation value, Analog Devices Inc's accounts receivable are only considered to be worth 75% of book value:

Analog Devices Inc's liquidation value for the quarter that ended in Jan. 2017 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 6317.066 - 4896.94 + 0.75 * 472.511 + 0.5 * 365.586 = 1,957

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Be Aware

Net receivables tells us a great deal about the different competitors in the same industry. In competitive industries, some attempt to gain advantage by offering better credit terms, causing increase in sales and receivables.

If company consistently shows lower % Net receivables to gross sales than competitors, then it usually has some kind of competitive advantage which requires further digging.

Average Days Sales Outstanding is a good indicator for measuring a companys sales channel and customers. A company may book great revenue and earnings growth but never receive payment from their customers. This may force a write-off in the future and depress future earnings.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Analog Devices Inc Annual Data

 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Accts Rec. 324 315 301 387 348 340 325 397 467 478

Analog Devices Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Accts Rec. 397 402 409 452 467 375 399 453 478 473
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