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AR
(Accounts Receivable)
AR (Accounts Receivable) represents money owed to a company by customers for goods/services delivered but not yet paid for. As a current asset, AR appears on the balance sheet and impacts working capital management.
Companies track Days Sales Outstanding (DSO) to measure AR efficiency - typical DSO ranges from 30-90 days. High AR growth without corresponding cash flow may signal collection problems. Factoring (selling AR to third parties) provides liquidity but at a discount. AR balances help assess credit risk and are crucial for DCF valuations. Unlike AP (Accounts Payable), AR represents incoming funds. Software like QuickBooks automates AR tracking with aging reports.
Companies track Days Sales Outstanding (DSO) to measure AR efficiency - typical DSO ranges from 30-90 days. High AR growth without corresponding cash flow may signal collection problems. Factoring (selling AR to third parties) provides liquidity but at a discount. AR balances help assess credit risk and are crucial for DCF valuations. Unlike AP (Accounts Payable), AR represents incoming funds. Software like QuickBooks automates AR tracking with aging reports.