Switch to:
GuruFocus has detected 3 Warning Signs with Brown-Forman Corp \$BF.B.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Brown-Forman Corp (NYSE:BF.B)
Accounts Receivable
\$611 Mil (As of Jan. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Brown-Forman Corp's accounts receivables for the quarter that ended in Jan. 2017 was \$611 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Brown-Forman Corp's Days Sales Outstanding for the quarter that ended in Jan. 2017 was 69.00.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Brown-Forman Corp's Liquidation Value for the quarter that ended in Jan. 2017 was \$-2,142 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.

Brown-Forman Corp's Days Sales Outstanding for the quarter that ended in Jan. 2017 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 611 / 808 * 91 = 69.00

2. In Ben Grahams calculation of liquidation value, Brown-Forman Corp's accounts receivable are only considered to be worth 75% of book value:

Brown-Forman Corp'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) = 197 - 3416 + 0.75 * 611 + 0.5 * 1238 = -2,142

* 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.

Brown-Forman Corp Annual Data

 Apr07 Apr08 Apr09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Accts Rec. 404 453 367 418 496 475 548 569 583 559

Brown-Forman Corp Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Accts Rec. 761 631 583 505 727 630 559 501 660 611
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)