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Mercer International, Inc. (NAS:MERC)
Accounts Receivable
$136 Mil (As of Dec. 2013)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Mercer International, Inc.'s accounts receivables for the quarter that ended in Dec. 2013 was $136 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Mercer International, Inc.'s Days Sales Outstanding for the quarter that ended in Dec. 2013 was 46.99.

In Ben Graham’s calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Mercer International, Inc.'s Liquidation Value for the quarter that ended in Dec. 2013 was $-854 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.

Mercer International, Inc.'s Days Sales Outstanding for the quarter that ended in Dec. 2013 is calculated as:

Days Sales Outstanding
=Account Receivable/Revenue*Days in Period
=135.893/263.174*91
=46.99

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

Mercer International, Inc.'s liquidation value for the quarter that ended in Dec. 2013 is calculated as:

Liquidation value
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=147.728-1189.481+0.75 * 135.893+0.5 * 170.908
=-854

* 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.

Mercer International, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Accts Rec. 7488109140139102162156145136

Mercer International, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Accts Rec. 150156156132153145154126131136
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