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GuruFocus has detected 6 Warning Signs with Sears Holdings Corp \$SHLD.
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Sears Holdings Corp (NAS:SHLD)
Accounts Receivable
\$466 Mil (As of Jan. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Sears Holdings Corp's accounts receivables for the quarter that ended in Jan. 2017 was \$466 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Sears Holdings Corp's Days Sales Outstanding for the quarter that ended in Jan. 2017 was 7.03.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Sears Holdings Corp's Liquidation Value for the quarter that ended in Jan. 2017 was \$-10,571 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.

Sears Holdings Corp's Days Sales Outstanding for the quarter that ended in Jan. 2017 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 466 / 6052 * 91 = 7.03

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

Sears Holdings Corp's liquidation value for the quarter that ended in Jan. 2017 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 286 - 13186 + 0.75 * 466 + 0.5 * 3959 = -10,571

* 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.

Sears Holdings Corp Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Accts Rec. 744 839 652 689 695 635 553 429 419 466

Sears Holdings Corp Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Accts Rec. 546 429 474 460 475 419 437 390 372 466
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