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Primus Guaranty Ltd  (OTCPK:PRSG) Accounts Receivable: \$5.73 Mil (As of Dec. 2011)

Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Primus Guaranty Ltd's accounts receivables for the quarter that ended in Dec. 2011 was \$5.73 Mil.

Accounts receivable can be measured by Days Sales Outstanding. Primus Guaranty Ltd's Days Sales Outstanding for the quarter that ended in Dec. 2011 was 5.06.

In Ben Graham's calculation of liquidation value, accounts receivable are only considered to be worth 75% of book value. Primus Guaranty Ltd's Net-Net Working Capital for the quarter that ended in Dec. 2011 was \$-639.92 Mil.

Historical Data

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

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Primus Guaranty Ltd Annual Data

 Dec02 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Accounts Receivable 7.68 6.47 6.16 5.86 5.73

Primus Guaranty Ltd Quarterly Data

 Mar07 Jun07 Sep07 Dec07 Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Accounts Receivable 5.86 6.94 5.63 5.41 5.73

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.

Primus Guaranty Ltd's Days Sales Outstanding for the quarter that ended in Dec. 2011 is calculated as:

 Days Sales Outstanding = Accounts Receivable / Revenue * Days in Period = 5.725 / 103.167 * 91 = 5.06

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

Primus Guaranty Ltd's liquidation value for the quarter that ended in Dec. 2011 is calculated as:

 Liquidation value = Cash And Cash Equivalents - Total Liabilities + (0.75 * Accounts Receivable) + (0.5 * Total Inventories) = 87.247 - 731.462 + 0.75 * 5.725 + 0.5 * 0 = -639.92

* 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