I’m not a CPA either. In Elite’s case, you record revenue and accounts receivable at the same time. They offset each other in the same ever since Elite doesn’t receive cash. Even if a customer pays cash it will still hit A/R until it hits Elite’s bank account where the receivable is then reduced by the increase in cash received.
A/R likely went up since they still hadn’t collected as revenues continued to grow. High A/R growth is usually driven by a few things:
1. Not collecting cash fast enough (not Elite) 2. Customers not paying (not an issue either) 3. Sales growth that drives a lag in A/R cash not yet collected.
A/R should stabilize unless sales continue to grow at a good clip in which case we see A/R grow basically at the rate of sales.
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