Customer Deposits
I am dealing with a company that takes customer deposits.
It has a large customer base that is growing, so it expects to grow the its deposit base. It also claim to use these customer deposits to fund its capex.
Does anyone have any experience dealing with a company like this?
My main questions are:
1/ How should this cash be treated? It seems odd to me to net it off against capex given a liability remains on the BS
2/ When working out FCF for valuation purposes would this be included?
You should be treating it as deferred revenue unless I misunderstood the question.
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