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GuruFocus has detected 3 Warning Signs with Illumina Inc \$ILMN.
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Illumina Inc (NAS:ILMN)
Accounts Receivable
\$381 Mil (As of Dec. 2016)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Illumina Inc's accounts receivables for the quarter that ended in Dec. 2016 was \$381 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Illumina Inc's Days Sales Outstanding for the quarter that ended in Dec. 2016 was 56.12.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Illumina Inc's Liquidation Value for the quarter that ended in Dec. 2016 was \$-89 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.

Illumina 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 = 380.93 / 619.347 * 91 = 56.12

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

Illumina 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) = 1558.724 - 2083.371 + 0.75 * 380.93 + 0.5 * 300.17 = -89

* 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.

Illumina Inc Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Accts Rec. 83 133 158 166 174 215 239 289 385 381

Illumina Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Accts Rec. 277 289 350 369 413 385 403 372 382 381
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