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Layne Christensen Co (NAS:LAYN)
Accounts Receivable
$125 Mil (As of Oct. 2013)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Layne Christensen Co's accounts receivables for the quarter that ended in Oct. 2013 was $125 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Layne Christensen Co's Days Sales Outstanding for the quarter that ended in Oct. 2013 was 52.66.

In Ben Graham’s calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Layne Christensen Co's Liquidation Value for the quarter that ended in Oct. 2013 was $-233 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.

Layne Christensen Co's Days Sales Outstanding for the quarter that ended in Oct. 2013 is calculated as:

Days Sales Outstanding
=Account Receivable/Revenue*Days in Period
=125.269/216.462*91
=52.66

2. In Ben Graham’s calculation of liquidation value, Layne Christensen Co's accounts receivable are only considered to be worth 75% of book value:

Layne Christensen Co's liquidation value for the quarter that ended in Oct. 2013 is calculated as:

Liquidation value
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=31.857-381.911+0.75 * 125.269+0.5 * 46.684
=-233

* 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

Days Sales Outstanding, Revenue, NCAV, Cash and Cash Equivalents, Total Liabilities, Inventory


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Layne Christensen Co Annual Data

Jan04Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13
Accts Rec. 697312916118718719400153

Layne Christensen Co Quarterly Data

Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13
Accts Rec. 162167166285289298153151133125
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