Appendix B Common Metrics and Terms in the Analysis of Preferential Transfers

• Jurisdiction: United States

Appendix B Common Metrics and Terms in the Analysis of Preferential Transfers

Detailed below is a listing of common metrics and terms that may be considered or referenced in the analysis of preferential transfers with respect to the ordinary-course defenses. This list is meant only for summary purposes and does not include all possible metrics and terms that may be encountered. It is also important to note that the terminology for each of the metrics below may vary depending on the source. Further, the inclusion of a source of information in the listing below does not necessarily indicate that the data provided by that source is reasonable to rely on for any specific industry or as it relates to any specific matter.

(1) Payment Days — Measure of the number of days between invoice and payment on individual invoices.

a. Common Source: Invoice and payment detail maintained by the parties
b. Alternative Terminology: True Days Sales Outstanding
c. Calculation:
Payment Day = Payment Date - Invoice Date

(2) Days Sales Outstanding (Turnover Method) — Aggregate measure of the average days' worth of sales within accounts receivable. Calculated based on the average accounts-receivable balance relative to total period sales.

a. Common Source: Public sources including, but not limited to, Capital IQ, RMA, and CRF
b. Alternative Terminology: Accounts receivable days outstanding, average collection period
c. Calculation:
A/R Turnover = Credit Sales/Average Accounts Receivable
Days Outstanding(Turnover Method) = Days in Period/A/R Turnover

(3) Days Sales Outstanding (Weighted Average Method) — Alternative method of calculating days sales outstanding based on the relative weightings of accounts receivable aging stratums (e.g., current, 0-30 past due, 30-60 days past due, etc.).

a. Common Sources: Accounts receivable aging reports maintained by the parties
b. Alternative Terminology: Accounts receivable days outstanding, average collection period
c. Calculation: Refer to Chapter 5 for example of the calculation

(4) Days Payables Outstanding (Turnover Method) — Aggregate measure of the average days' worth of cost of sales within accounts payable. Calculated based on the average accounts-payable balance relative to total period cost of sales.

a. Common Source: Public sources including, but not limited to, Capital IQ, RMA and CRF
b. Alternative Terminology: Accounts payable days outstanding, average payment period
c. Calculation:
Payables Turnover = Total Purchases/Average

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