If a nonfinancial company securitizes its accounts receivables for less than their book value, the most likely effect on the financial statements is to increase:
The candidate should be able to analyze and discuss the following ways to manipulate the cash flow statement:
·stretching out payables,
·financing of payables,
·securitization of receivables, and
·using stock buybacks to offset dilution of earnings.
The securitization of accounts receivables for less than book value would result in a loss on the income statement, but an increase in the cash from operations, reflecting the proceeds received.