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GuruFocus has detected 5 Warning Signs with Enstar Group Ltd \$ESGR.
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Enstar Group Ltd (NAS:ESGR)
Accounts Receivable
\$407 Mil (As of Dec. 2016)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Enstar Group Ltd's accounts receivables for the quarter that ended in Dec. 2016 was \$407 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Enstar Group Ltd's Days Sales Outstanding for the quarter that ended in Dec. 2016 was 293.58.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Enstar Group Ltd's Liquidation Value for the quarter that ended in Dec. 2016 was \$-8,580 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.

Enstar Group Ltd's Days Sales Outstanding for the quarter that ended in Dec. 2016 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 406.676 / 126.402 * 91 = 293.58

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

Enstar Group Ltd's liquidation value for the quarter that ended in Dec. 2016 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 1178.057 - 10063.432 + 0.75 * 406.676 + 0.5 * 0 = -8,580

* 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.

Enstar Group Ltd Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Accts Rec. 25 16 18 25 50 15 75 79 381 407

Enstar Group Ltd Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Accts Rec. 84 79 120 169 513 381 418 416 404 407
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