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GuruFocus has detected 5 Warning Signs with Twin Disc Inc \$TWIN.
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Twin Disc Inc (NAS:TWIN)
Accounts Receivable
\$22.7 Mil (As of Dec. 2016)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Twin Disc Inc's accounts receivables for the quarter that ended in Dec. 2016 was \$22.7 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Twin Disc Inc's Days Sales Outstanding for the quarter that ended in Dec. 2016 was 61.59.

In Ben Grahams calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Twin Disc Inc's Liquidation Value for the quarter that ended in Dec. 2016 was \$-31.0 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.

Twin Disc Inc's Days Sales Outstanding for the quarter that ended in Dec. 2016 is calculated as:

 Days Sales Outstanding = Account Receivable / Revenue * Days in Period = 22.727 / 33.672 * 91 = 61.59

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

Twin Disc Inc's liquidation value for the quarter that ended in Dec. 2016 is calculated as:

 Liquidation value = Cash and Cash Equivalents - Total Liabilities + (0.75 * Account Receivable) + (0.5 * Inventory) = 12.991 - 93.266 + 0.75 * 22.727 + 0.5 * 64.529 = -31.0

* 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.

Twin Disc Inc Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Accts Rec. 63.3 67.6 53.4 43.0 61.0 63.4 46.3 40.2 43.9 25.4

Twin Disc Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Accts Rec. 39.1 40.7 35.7 43.9 31.3 33.6 32.6 25.4 25.8 22.7
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