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GuruFocus has detected 2 Warning Signs with Groupon Inc \$GRPN.
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Groupon Inc (NAS:GRPN)
Accounts Receivable
\$87 Mil (As of Dec. 2016)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Groupon Inc's accounts receivables for the quarter that ended in Dec. 2016 was \$87 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Groupon Inc's Days Sales Outstanding for the quarter that ended in Dec. 2016 was 8.46.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Groupon Inc's Liquidation Value for the quarter that ended in Dec. 2016 was \$-522 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.

Groupon Inc's Days Sales Outstanding for the quarter that ended in Dec. 2016 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 86.655 / 934.885 * 91 = 8.46

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

Groupon Inc'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) = 891.846 - 1496.957 + 0.75 * 86.655 + 0.5 * 35.61 = -522

* 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.

Groupon Inc Annual Data

 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Accts Rec. 0 0 1 42 109 97 84 91 68 87

Groupon Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Accts Rec. 125 91 92 95 76 68 73 69 74 87
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