Switch to:
Cintas Corp (NAS:CTAS)
Accounts Receivable
$508 Mil (As of May. 2014)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Cintas Corp's accounts receivables for the quarter that ended in May. 2014 was $508 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Cintas Corp's Days Sales Outstanding for the quarter that ended in May. 2014 was 39.97.

In Ben Graham’s calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Cintas Corp's Liquidation Value for the quarter that ended in May. 2014 was $-1,249 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.

Cintas Corp's Days Sales Outstanding for the quarter that ended in May. 2014 is calculated as:

Days Sales Outstanding
=Account Receivable/Revenue*Days in Period
=508.427/1157.479*91
=39.97

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

Cintas Corp's liquidation value for the quarter that ended in May. 2014 is calculated as:

Liquidation value
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=513.288-2269.594+0.75 * 508.427+0.5 * 251.239
=-1,249

* 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

Days Sales Outstanding, Revenue, NCAV, Cash and Cash Equivalents, Total Liabilities, Inventory


Historical Data

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

Cintas Corp Annual Data

May05May06May07May08May09May10May11May12May13May14
Accts Rec. 327390409430719382856926505508

Cintas Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Accts Rec. 912926459982510505512521530508
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)
Free 7-day Trial
FEEDBACK