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Brady Corp  (NYSE:BRC) Accounts Receivable: \$150 Mil (As of Jul. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Brady Corp's accounts receivables for the quarter that ended in Jul. 2017 was \$150 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Brady Corp's Days Sales Outstanding for the quarter that ended in Jul. 2017 was 47.21.

In Ben Graham's calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Brady Corp's Net-Net Working Capital for the quarter that ended in Jul. 2017 was \$-50 Mil.

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15 Jul16 Jul17 Accounts Receivable 169.26 177.65 157.39 147.33 149.64

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Accounts Receivable 147.33 145.83 140.02 145.76 149.64

Calculation

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.

Brady Corp's Days Sales Outstanding for the quarter that ended in Jul. 2017 is calculated as:

 Days Sales Outstanding = Accounts Receivable / Revenue * Days in Period = 149.638 / 289.212 * 91 = 47.21

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

Brady Corp's liquidation value for the quarter that ended in Jul. 2017 is calculated as:

 Liquidation value = Cash And Cash Equivalents - Total Liabilities + (0.75 * Accounts Receivable) + (0.5 * Total Inventories) = 133.944 - 350.083 + 0.75 * 149.638 + 0.5 * 107.024 = -50

* 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