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Spartech Corporation (NYSE:SEH)
Accounts Receivable
\$151 Mil (As of Oct. 2012)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Spartech Corporation's accounts receivables for the quarter that ended in Oct. 2012 was \$151 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Spartech Corporation's Days Sales Outstanding for the quarter that ended in Oct. 2012 was 47.90.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Spartech Corporation's Liquidation Value for the quarter that ended in Oct. 2012 was \$-198 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.

Spartech Corporation's Days Sales Outstanding for the quarter that ended in Oct. 2012 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 150.566 / 286.804 * 91 = 47.90

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

Spartech Corporation's liquidation value for the quarter that ended in Oct. 2012 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 1.092 - 364.648 + 0.75 * 150.566 + 0.5 * 105.099 = -198

* 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

Historical Data

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

Spartech Corporation Annual Data

 Oct03 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Accts Rec. 150 188 214 201 212 176 130 135 156 151

Spartech Corporation Quarterly Data

 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Accts Rec. 144 135 129 149 147 156 140 154 147 151
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