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Dear y'all,

Not a "real accountant" by any means, but...

IMHO the point of the flow ratio is a measure of how much "free money" (non-interest bearing liabilities) a company has vs. "tied up money" (working capital requirements). Given this, I agree with TMFBobdog.

One example of "accrued expenses" would be paycheques owing. In most jobs folks are not paid daily, so a company gets free use of their employees' pay in the interim (until the employees receive and cash their paycheques).

I'm confused about the "current portion of deferred revenues" being a liability. It sorta sounds to me more like an asset. Unless they are paying out stuff, in which case certainly the "deferred revenue" is "free cash".

Stewart (in The Quest for Value) talks about "non-interest bearing current liabilities" as being free money, so from that point of view you may include both.


Lleweilun Smith
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