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Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Tata Motors, Ltd.'s accounts receivables for the quarter that ended in Dec. 2013 was $1,659 Mil.
Accounts receivable can be measured by Days Sales Outstanding. Tata Motors, Ltd.'s Days Sales Outstanding for the quarter that ended in Dec. 2013 was 17.20.
In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Tata Motors, Ltd.'s Liquidation Value for the quarter that ended in Dec. 2013 was $-9,041 Mil.
Accounts Receivable is money owed to a business by customers and shown on its Balance Sheet as an asset.
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.
Tata Motors, Ltd.'s Days Sales Outstanding for the quarter that ended in Dec. 2013 is calculated as:
|Days Sales Outstanding|
|=||Account Receivable||/||Revenue||*||Days in Period|
2. In Ben Grahams calculation of liquidation value, Tata Motors, Ltd.'s accounts receivable are only considered to be worth 75% of book value:
Tata Motors, Ltd.'s liquidation value for the quarter that ended in Dec. 2013 is calculated as:
|=||Cash and Cash Equivalents||-||Total Liabilities||+||(0.75 * Account Receivable)||+||(0.5 * Inventory)|
|=||3593.08072488||-||15565.0741351||+||0.75 * 1658.9785832||+||0.5 * 3373.97034596|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
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 companys 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.
Tata Motors, Ltd. Annual Data
Tata Motors, Ltd. Quarterly Data