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Coventry Health Care, Inc. (NYSE:CVH)
Accounts Receivable
\$1,206 Mil (As of Mar. 2013)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Coventry Health Care, Inc.'s accounts receivables for the quarter that ended in Mar. 2013 was \$1,206 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Coventry Health Care, Inc.'s Days Sales Outstanding for the quarter that ended in Mar. 2013 was 31.26.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Coventry Health Care, Inc.'s Liquidation Value for the quarter that ended in Mar. 2013 was \$-1,562 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.

Coventry Health Care, Inc.'s Days Sales Outstanding for the quarter that ended in Mar. 2013 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 1206.027 / 3520.235 * 91 = 31.26

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

Coventry Health Care, Inc.'s liquidation value for the quarter that ended in Mar. 2013 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 1652.423 - 4119.274 + 0.75 * 1206.027 + 0.5 * 0 = -1,562

* 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.

Coventry Health Care, Inc. Annual Data

 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Accts Rec. 135 152 304 374 576 818 755 793 988 1,165

Coventry Health Care, Inc. Quarterly Data

 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Accts Rec. 793 842 853 754 988 1,055 1,207 1,305 1,165 1,206
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