FIN

This could also mean that it is expensive to collect the cash from the customers, and, therefore, there would likely be future write-offs or bad debt expenses. Thus, investors need to dig deeper into the cash flows of the company and collection periods to determine if the increase in receivables is just a fleeting measure to hide other forms of financial issues. In case the income statement of the company is reading in a good way, its cash flow statement might be differently projected. When great earnings are built on the back of weak or adverse cash flows from operations that is a red flag.