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Valassis Communications Inc (NYSE:VCI)
Accounts Receivable
\$408 Mil (As of Sep. 2013)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Valassis Communications Inc's accounts receivables for the quarter that ended in Sep. 2013 was \$408 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Valassis Communications Inc's Days Sales Outstanding for the quarter that ended in Sep. 2013 was 76.14.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Valassis Communications Inc's Liquidation Value for the quarter that ended in Sep. 2013 was \$-631 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.

Valassis Communications Inc's Days Sales Outstanding for the quarter that ended in Sep. 2013 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 408.322 / 489.383 * 91 = 76.14

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

Valassis Communications Inc's liquidation value for the quarter that ended in Sep. 2013 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 74.985 - 1030.94 + 0.75 * 408.322 + 0.5 * 36.705 = -631

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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 own currency.

Valassis Communications Inc Annual Data

 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Accts Rec. 207 265 274 339 515 480 429 460 448 427

Valassis Communications Inc Quarterly Data

 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Accts Rec. 411 407 448 417 379 399 427 417 388 408
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