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Adobe Systems Inc  (NAS:ADBE) Accounts Receivable: \$1,006 Mil (As of Aug. 2017)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Adobe Systems Inc's accounts receivables for the quarter that ended in Aug. 2017 was \$1,006 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Adobe Systems Inc's Days Sales Outstanding for the quarter that ended in Aug. 2017 was 49.87.

In Ben Graham's calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Adobe Systems Inc's Net-Net Working Capital for the quarter that ended in Aug. 2017 was \$387 Mil.

Historical Data

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

 Nov07 Nov08 Nov09 Nov10 Nov11 Nov12 Nov13 Nov14 Nov15 Nov16 Accounts Receivable 617.23 599.82 591.80 672.01 833.03

 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Accounts Receivable 731.17 833.03 850.84 901.45 1,006.19

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.

Adobe Systems Inc's Days Sales Outstanding for the quarter that ended in Aug. 2017 is calculated as:

 Days Sales Outstanding = Accounts Receivable / Revenue * Days in Period = 1006.187 / 1841.074 * 91 = 49.87

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

Adobe Systems Inc's liquidation value for the quarter that ended in Aug. 2017 is calculated as:

 Liquidation value = Cash And Cash Equivalents - Total Liabilities + (0.75 * Accounts Receivable) + (0.5 * Total Inventories) = 5368.486 - 5736.381 + 0.75 * 1006.187 + 0.5 * 0 = 387

* 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.

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