Working Capital Calculation with no AR

by a searcher from Georgetown University

3 years ago

Working on a deal that collects all payments in advance for services and therefore has no AR. They mark these deposits in their Payables as Unearned Revenue until the services are rendered.

I've pasted the Current section of the Bal Sheet below. Question is: How do I calculate Working Capital when they have no Receivables?

Current Balance Sheet
CURRENT ASSETS
Cash: $1,051
Deposits: $15

CURRENT LIABILITIES
AP & Accrued Liabilities: $1046
Income Taxes Payable: $82

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16 comments

investor from The University of Chicago - Booth School of Business

Pre-paid tuition should be recorded as a liability with full value paid by the seller to the buyer at closing (i.e. the cash should be left in the business with rare exception).

3 days ago | like reply | 0 likes

searcher from Pennsylvania State University

Very helpful thread

3 years ago | like reply | 0 likes

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