What was this formula again? Something like Cash Collections = Sales - Increase in A/R + Increase in Unearned Revenue?
Yes, or - decrease in unearned revenue.
Thats it
When you write off receivables do you have to make any changes to the above equation?
Bump, could someone explain this last part to me please? Impact of writing off receivables on the cash collections equation, or is there no impact at all. Thank you
it is in cfai book earnings quality my understanding: net ar (net of allowance) you remove allowance (the change of allowance is important if increased you need to increase change of ar) to get gross then you need to put back write-off which I believe is flow value, amount written off in a year you add to ar so change in net ar + change in allowance + write-off of the year = non cash result of revenues revenues - this non cash + increase in defered revenue = cash collection not 100% sure, pls correct
Think about this one people. An allowance for doubtful accounts, one that the business did not have a good grasp on measuring effectively, is therefore a bad debt and no longer a receivable.
I hope you are right!!! Thanks a lot for the response, very helpful!!
so what was the adjustment for write-offs? i think i got something close to 3.
Should be 65…