ok, not sure the best way to think of this, but it seems they are assuming that if the $2million of A/R securitization had not been securitized, your A/R would be $118. Thus, Cash = $137 - (118-111) = $130..
But, I thought the whole idea of A/R securitization is to collect the cash! So, the way I would do it is $137 + $2 - ($116-$111) = $134.
If you securitize A/R without consolidating the SPE, your A/R drop by the amount that you securitized), so A/R goes down...think of ratios that depend on A/R.
If you consolidate the SPE, then A/R does not change.
Also, you have another asset added, which is the investment in the SPE.
Yep, i know that question. Its a matter of timing of the securitization.
But while we are on this topic, does anyone have a quick and easy tutorial on what happens in a securitization of receivables?
Like you sell your receivables, what happens to all your ratios? For some reason I keep struggling with this. If anyone has a link, that would be nice. thanks.