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Health Net Inc (NYSE:HNT)
Accounts Receivable
\$268 Mil (As of Dec. 2015)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Health Net Inc's accounts receivables for the quarter that ended in Dec. 2015 was \$268 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Health Net Inc's Days Sales Outstanding for the quarter that ended in Dec. 2015 was 6.05.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Health Net Inc's Liquidation Value for the quarter that ended in Dec. 2015 was \$-1,149 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.

Health Net Inc's Days Sales Outstanding for the quarter that ended in Dec. 2015 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 267.655 / 4036.401 * 91 = 6.05

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

Health Net Inc's liquidation value for the quarter that ended in Dec. 2015 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 3215.221 - 4564.566 + 0.75 * 267.655 + 0.5 * 0 = -1,149

* 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.

Health Net Inc Annual Data

 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Accts Rec. 881 190 241 271 565 487 228 194 151 268

Health Net Inc Quarterly Data

 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Accts Rec. 344 194 450 849 723 151 529 657 998 268
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