Posted: 28 May 2019 07:47 PM PDT

Hi - looking for input here. In a DCF it seems to be the norm for an analyst to slap a fixed % of sales in the WC line and call it a day.

I know using % of sales makes the model more standardized, saves time, etc. but I'm doing a deep dive so don't care about that for sake of this example.

Thinking about what we're trying to solve for - I understand the line as our assumption of the absolute bare-bones expenses (inventory stocking, AP's, etc.) that a firm would need to keep the lights on.

To come up with a projection I went through (example) company's history. If I take a simple delta of WC* year over year, I get a mix of positive and negative numbers as the accruals even out.

*WC calc'd as (CA - CL)

For the purposes of a DCF, the positive and negative fluctuations throw off this idea of an expense estimate. Does anyone have a better way to project WC? For example I thought about just taking the absolute values of past year/year changes. Thanks

submitted by /u/teenagediplomat
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JD.com accounting

Posted: 29 May 2019 03:36 AM PDT

Dear all, I am an investor in the company JD.com. One issue has bothered me for some time related to the company, and I would like if you could clear it up for me since I am not that proficient when it comes to accounting: Each quarterly earnings report since JD Digits (what was previously JD Finance) was reconsolidated (starting with Q4, 2017) has noted that the receivables of JD Digits have an impact on JD's operating cash flow (CFO). These reports then present FCF and remove this impact on the CFO from the FCF.

I don't fully understand how, mechanically how this works. On the one hand, it makes sense to me that, since JD still absorbs the credit risk for the receivables of JD Digits, these should be removed from its cash flow. After all, if JD Digits was still consolidated, then the loans it made to people for purchasing JD products would be counted as cash outflow, while the cash that JD then received from these customers would be cash inflow. These would cancel each other out. So subtracting the positive effect these receivables have on CFO (as has been the case the last few quarters) allows us to see the true cash flow situation now that JD Digits is deconsolidated.

However, once these receivables are actually received by JD Digits (i.e., paid off by the borrowers), then JD no longer absorbs the credit risk for them. So if these were subtracted from JD's CFO (in calculating FCF), should they be added back to CFO once they are received?

I also have essentially the same question for what happens once the receivables are securitized and sold off to third parties (which JD describes in its most recent quarterly earnings 6K). Once this is done successfully, shouldn't the amount sold off be added back?

Thanks for your help. Ted Paul

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Kyle Bass: Trouble in Hong Kong- Part Deux

Posted: 29 May 2019 01:24 AM PDT

submitted by /u/Beren-
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The Liquidity of a Plasma Market

Posted: 28 May 2019 05:43 AM PDT

submitted by /u/Beren-
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