CompanyGraph
Tracks the cash flow impact of shifting customer collection patterns, exposing whether revenue growth is converting to cash or accumulating as uncollected claims.
Change in accounts receivable shows how much customer invoices have increased or decreased during the period. When receivables grow, the company has less cash collected; when they shrink, more cash has come in.
Change in accounts receivable shows how much customer invoices have increased or decreased during the period. When receivables grow, the company has less cash collected; when they shrink, more cash has come in.
How it affects cash flow:
- Increase in receivables: Subtracted from operating cash flow (sales made but cash not yet collected)
- Decrease in receivables: Added to operating cash flow (collected cash from prior sales)
Interpreting receivables changes:
- Growing faster than revenue: May indicate collection problems or aggressive revenue recognition
- Growing with revenue: Normal pattern for expanding businesses
- Declining receivables: Could signal improved collections or declining sales
Key metrics to monitor:
- Days sales outstanding (DSO): Average collection period; rising DSO is a warning sign
- Receivables turnover: How many times receivables are collected annually
- Bad debt provisions: Allowance for uncollectible accounts
Compare receivables growth to revenue growth over time. Persistent divergence may indicate credit quality issues or customer concentration risk.
Where it fits
Accounts ReceivableAccounts receivable is money owed to the company by customers who have not yet paid. Rising receivables can mean growing sales, but also that cash collection is slower.→Change in Accounts Receivable (CF)