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>that have filled Groupon's pockets with over a billion in cash. Having 'cash on hand' is great but it seems that groupon owes more than they have by a conside

• JacobIrwin 15y ago
  Revenue is also cash - before expenses [they are collecting this amount]. I'm not suggesting that Groupon's 'operations activities' aren't responsible for pulling/keeping them in the red. However, investors like Warren Buffet look for high-earning and unprofitable companies quite frequently to get involved with - companies like Groupon. Reason being, with some direction by a strong [/new] board of directors (majority shareholders; highly-successful business leaders; wiki: 'See's Candies', 'Washington Post', 'Berkshire Hathaway'), a company can re-divert [i.e. 'pivot'] resources, slash out unprofitbale segments, etc., and successfully revive a titan. Response note: I garnered my figure of $1.6 billion based on a Dartmouth article here: http://www.tuck.dartmouth.edu/cds-uploads/case-studies/pdf/Groupon_Case_R2.pdf http://www.tuck.dartmouth.edu/cds-uploads/case-studies/pdf/G... -- see bottom of page two, second-to-last paragraph in the section titled, "The Fastest-Growing Business in History."
  • 0x12 15y ago
    That mentions revenues only, and you can't use that to translate directly to cash, they're not the same thing, you can't use those terms interchangeably. If a company has 100K in revenues and 50K in expenses per month after one month they'll have 50K in cash, to give a very limited example. So you have to take the revenues and reduce them by the burn rate to get an idea of how big groupons war chest really is. According to groupons own filings they've got 208 million in the bank so they've spent a good 1.4 billion of that money they took in. Of course 200+ million is still not exactly pocket change. I don't quite follow the Warren Buffet link, his only comment on groupon as far as I know is that he said he'd read their IPO filing papers but that was about it.
  • jacques_chester 15y ago
    > Revenue is also cash Please read an Accounting 101 textbook to learn why this isn't true.
    • JacobIrwin 15y ago
      "Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold." - Investopedia You may be thinking of 'marginal revenue' perhaps. I am talking to both of you. Tell me to read an accounting book - sure, if I have time after I am done buying a basket of financial sector out-of-the-money put options for the boutique hedge fund I manage this morning, I will be sure to do that. So yeah - while, I am brushing off my old 101 book, maybe you can try not to make yourself sound foolish in front of audience next time. http://www.investopedia.com/terms/r/revenue.asp#axzz1XG80HyjP http://www.investopedia.com/terms/r/revenue.asp#axzz1XG80Hyj... ^^^ Definition of 'revenue'. I.e., 'gross,' 'top-line,' 'nothing to do with expenses; yet.' http://www.investopedia.com/terms/m/marginal-revenue-mr.asp#axzz1XG80HyjP http://www.investopedia.com/terms/m/marginal-revenue-mr.asp#... ^^^Definition of 'marginal revenue.' http://dictionary.reference.com/browse/plebeian http://dictionary.reference.com/browse/plebeian ^^^Those that, by definition, never make it to the top 1%; ya both.
      • jacques_chester 15y ago
        I'm very happy that you can buy baskets of financial sector out-of-money put options for boutique hedge funds and still find time to use Google. However, you are still wrong. In accounting, revenues are not the same as cash. A revenue event may be committed to the books well in advance of cash changing hands, and indeed the first step for most revenue is to be entered into accounts receivable. What we are discussing here the difference between cashflow and revenue, which is a critical question for investors because of the way Groupon is choosing to run its books. If you would be so kind as to tell me the fund you work for, I would be grateful. It is my intention never to invest in such a firm.
        • JacobIrwin 15y ago
          We only invest for clients in the net worth range of $100k+. Just go back and read the entire first sentence that you continue to quote: "Revenue is also cash - before expenses [they are collecting this amount]. I'm not suggesting that Groupon's 'operations activities' aren't responsible for pulling/keeping them in the red." ... clearly not a Merriam-Webster quote - rather my own; to describe a simple concept: Groupon makes money (see definitions: USD; cash) - potentially, these resources could be spent more efficiently. In regards to Mark-to-Market Accounting, an simple example could be for when a journal entry is made in/debit to 'Accounts Receivable' - you're right, this has not effect on the cash balance. So your point is valid, but contradictory. Because amounts under ‘Accounts Receivables’ are not considered revenues – assets (maybe, but still not exactly) - but certainly they cannot be called revenues. As receivables are earned, they are transferred to 'Cash,' under assets and now it’s both a revenue and cash. Also, companies rarely sit on receivables. Instead, they factor them (or borrow against them) and "Voilà!"... cash! The majority of business owners believe they can invest these amounts and make a higher return than they are being charged in interest. That all being said, I think your point there isn't very strong.