Simply wall st, analyse BIG, page-16

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Panda7

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22/03/17

17:22

Post #: 23550462
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Originally posted by 618600 ↑

My Response to the conclusion by https://**.st

If you look carefully at the make up of the "Current Liabilities" on page 9 of the
BIG UN LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION: FOR THE PERIOD ENDED 31 DECEMBER 2016 released to the ASX on 27 Feb 2017 at 11:24:56am, you will find:

Deferred revenue $2,451,247 out of Total Current Liabilities $4,440,851.
Accounting 101 will teach you that where fees or income are received upfront or in advance by a business, that portion of the income yet unearned at the point of preparing the financial statement will have to be classified as a liability (just in case the customer/client wants the money back!).
Through the passage of time, the income earned over time will be released and recognised in the revenue statement with a corresponding reduction in the Deferred Revenue balance as it is no longer deferred. The accountants sometimes refer to this as accruals accounting i.e. to correctly account for any time based revenue (or expense for that matter).

To conclude "that BIG will face liquidity issue just because:
Total Current Liabilities at $4,440,851 > Total Current Assets $4,055,326"
without examining the components of the Current Liabilities is just plain LUDICROUS.

In fact, I would prefer to see "deferred revenue" as an item in liabilities rather than "accrued expenses or expenses payable" anytime, whether it be current (within 12 months) or non-current (more than 12 months).
It means that I have money upfront/in advance sitting in the bank that can only help liquidity, and not hinder it.

Please DYOR. E&OE

Expand

still at the time of the accounts they owe about $500,000 for the net trade payables / receivables...so their cash balance is closer to $2m.

BIG Price at posting: 42.5¢ Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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