Accounting is not my strong suit so the ?'s about cash collections, accts rec, payable, etc seem counter intuitive. For example: AIG reports '07 revenue of 14.3 BB. During 2007 accts rec rose by .7 BB, accts payable increased by 1.1 BB, and unearned revenue increased by .5 BB. Cash collection from customers was??
Thought process on this would be appreciated. Thanks.
Edited 1 time(s). Last edit at Thursday, May 26, 2011 at 11:19PM by jgrandits.作者: maryli 时间: 2011-7-13 13:35
14.3 minus the increase in AR = 13.6BB作者: benbenxiong 时间: 2011-7-13 13:36
I do not know anything about the question but I will take a run at it....I will try and simplify it too.
Think accrual.
14.3 in revenue. Did they collect all that in cash? No, because they AR rose by .7
So subtract .7 from 14.3 = 13.6
Now, AP increased. what does that mean? Well they held off paying some bills (e.g. accrued them) but paying or not paying cash to suppliers does not affect cash from customers so ignore it
Now unearned revenue increased by .5 what does that mean. Well customers paid them money but they have not been able to recognize the revenue. So that's cash from customers. Add it
The answer should be 14.1作者: Otabek 时间: 2011-7-13 13:36
I was just thinking i needed to add 0.5 to my answer... good call Thecodont作者: FinancialAnaly 时间: 2011-7-13 13:36
