From the course: Excel for Finance: Building a Three-Statement Operating Model

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Forecasting the accounts receivable

Forecasting the accounts receivable - Microsoft Excel Tutorial

From the course: Excel for Finance: Building a Three-Statement Operating Model

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Forecasting the accounts receivable

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- [Instructor] Okay, so the first line item we're going to model out is the accounts receivable. Accounts receivable is nothing more than revenue we have earned but have yet to receive in cash. So this is money that our customers owe us. And the way we forecast accounts receivable is using a working capital statistic called days sales Outstanding. It basically just means how many days on average does it take us to collect payment from our customers? And so that's what we're going to be using to leverage for our forecast, but first we have to model the history in order to translate it into an assumption for the future. So let's build that out. Days sales outstanding. I could type this correctly. This is DSO. Again, how many days does it take us to get paid? The calculation for that is the average AR balance over a given time period divided by the, for this one, it's going to be the big box revenue, right? 'Cause that's what…

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