FRA Question Please explain why Securitized receivables are?
Page 357 CFAI volume 2 (FRA) problem 14:
XQY reported 2007 revenue of 137M. Its AR balance beganthe year at 11M and ended at 16M. At year end, 2M of receivables had been securitized. What’s XQY cash collections from customers?
My reasoning:
- 5M is AR increase means cash outflows (not collected)
- Securitized AR of 2M means (“according to my brain”) we sold 2M of AR (cash inflows)
Net cash movement Negative 3M
A. 130
B.132
C.134
I choose C 134… I was wrong
Please explain |