Practice // Questions and comments // Should factoring receivables be restated as a discounted bill?

Financial analysis : Question 11
Should factoring receivables be restated as a discounted outstanding bill?

ALL THEMES
  • COST OF CAPITAL
  • FINANCIAL ANALYSIS
  • FINANCIAL ENGINEERING
  • FINANCIAL MANAGEMENT
  • FINANCIAL POLICY
  • VALUATION
Yes, definitely, as they work on the same logic: an asset is removed from the balance sheet (permanently, although with discounting this may be temporary) in order to obtain financing, which is evidence of financial and commercial practice that deserves to be taken into consideration.

For more information, see chapter 7 of the Vernimmen.