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GuruFocus has detected 2 Warning Signs with Barnes & Noble Inc \$BKS.
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Barnes & Noble Inc (NYSE:BKS)
Accounts Receivable
\$70 Mil (As of Jan. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Barnes & Noble Inc's accounts receivables for the quarter that ended in Jan. 2017 was \$70 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Barnes & Noble Inc's Days Sales Outstanding for the quarter that ended in Jan. 2017 was 4.94.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Barnes & Noble Inc's Liquidation Value for the quarter that ended in Jan. 2017 was \$-813 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.

Barnes & Noble 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 = 70.434 / 1300.908 * 91 = 4.94

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

Barnes & Noble 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) = 11.628 - 1382.428 + 0.75 * 70.434 + 0.5 * 1010.343 = -813

* 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.

Barnes & Noble Inc Annual Data

 Jan07 Jan08 Jan09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Accts Rec. 100 112 81 47 82 91 70 54 17 21

Barnes & Noble Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Accts Rec. 77 73 17 100 82 69 21 102 76 70
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