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Charm Communications Inc (NAS:CHRM)
Accounts Receivable
\$107.0 Mil (As of Jun. 2013)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Charm Communications Inc's accounts receivables for the quarter that ended in Jun. 2013 was \$107.0 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Charm Communications Inc's Days Sales Outstanding for the quarter that ended in Jun. 2013 was 227.94.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Charm Communications Inc's Liquidation Value for the quarter that ended in Jun. 2013 was \$86.5 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.

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

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 107.039 / 42.851 * 91 = 227.94

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

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

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 121.378 - 115.12 + 0.75 * 107.039 + 0.5 * 0 = 86.5

* 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.

Charm Communications Inc Annual Data

 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Accts Rec. 0.0 0.0 0.0 0.0 31.4 29.8 49.7 103.9 90.0 117.3

Charm Communications Inc Quarterly Data

 Mar11 Jun11 Sep11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Dec13 Accts Rec. 62.9 77.7 104.1 101.1 94.1 115.3 90.0 94.1 107.0 117.3
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