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Definition of Notes receivable
Amounts owed to the company that have been formalized by a legal agreement called a note.
notes receivable are promissory notes that the company has accepted from its debtors. Most promissory notes pay interest. Those that are due within a year are shown under “Current Assets.” Those that mature in more than a year would be listed under “Long-term Assets.” If a note is being
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
Money owed by customers.
Amounts owed to a company by customers that it sold to on credit. Total accounts receivable are usually reduced by an allowance for doubtful accounts.
Amounts owed to the company, generally for sales that it has made.
Short-term, non-interest-bearing debts owed to a
A current asset on the balance sheet, representing short-term
Amounts due from customers for sales on open account, not evidenced
Money owed to a business for merchandise or services sold on open account.
The number of days it would take to collect the ending
The ratio of net credit sales to average accounts receivable, a measure of how
A ratio computed by dividing annual
The weighted-average age of all of the firm's outstanding invoices.
The ratio of accounts receivables to sales, or the total
notes issued by states and municipalities to obtain interim financing for
Average collection period.
Demand master notes
Short-term securities that are repayable immediately upon the holder's demand.
Discounting of Accounts Receivable
Short-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable.
Documented discount notes
Commercial paper backed by normal bank lines plus a letter of credit from a
Note the maturity of which can be extended by mutual agreement of the issuer and
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a
Amounts owed by the company that have been formalized by a legal document called a note.
Notes to the financial statements
A detailed set of notes immediately following the financial statements in
NUMBER OF DAYS SALES IN RECEIVABLES
(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that haven’t been collected yet.
Project notes (PNs)
Project notes are issued by municipalities to finance federally sponsored programs in
Receivables balance fractions
The percentage of a month's sales that remain uncollected (and part of
Receivables turnover ratio
Total operating revenues divided by average receivables. Used to measure how
TANs (tax anticipation notes)
Tax anticipation notes issued by states or municipalities to finance current
Debt obligations of the U.S. Treasury that have maturities of more than 2 years but less than 10 years.
Unbilled Accounts Receivable
Revenue recognized under the percentage-of-completion
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