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The other question that I had is dealing with the assets portion of the Balance Sheet. What is "NOTES RECEIVABLE - long-term portion" is this like a loan that they loaned out to someone else, or a bond, but it seems like this would be an investment somehow?


Yes, Notes Receivable is like a loan. It is money the client owes to HCSG.

Accounts Receivable are sales on credit where the client is obligated to pay in x number of days, but there is no written promise. For Notes Receivable there is a written promise. Usually it is structured with principal and interest, but in the case of HCSG, it looks like they don't charge interest.

These Notes Receivable for HCSG look like receivables for long term care policies to clients who went into bankruptcy, so the receivables have been turned into written obligations and reclassified as Notes Receivable. It also looks as if some of the Notes are not collectible (called "impaired"), and HCSG has set up a reserve for those amounts they don't feel they will ever collect from these clients.

All this is described in the notes to the financial statments on the 10-K. (See Notes 1 & 2 in the 10-K)

On the Balance Sheet, Current Assets are those things of value to the company expected to be turned into cash within one year. So the principal due that period on a Notes Receiveable -- the "Short Term" portion -- would fall under Current Assets. The remaining longer term portion would fall under Non-Current Assets.

Hope this helps,

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