Rough ride ahead

Struggling with high receivables, these companies are at a high risk of financial distress

- Arul Selvan

In accounting, accounts receivable (AR) refers to an entry that is created when a company’s sales volume is higher than the amount realized. That means while the sale has been made, the money has not yet come to the company. Although there may be some genuine reasons for which a company was unable to collect the dues upfront, investors should remember that if it cannot collect the money because of an adverse event, that will have a negative impact on the company.

We have prepared a list of companies whose receivables are as high as 75 per cent of their FY21 revenues. Here are some key observations: