Answer – Revenue Recognition
This is the answers for Quiz – Revenue Recognition.
| MYR Million | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 |
| Revenue | 92.6 | 89.1 | 87.0 | 86.1 | 79.3 | 69.1 | 71.8 |
| Current billed receivables | 50.6 | 57.1 | 61.2 | 66.4 | 58.1 | 42.5 | 44.7 |
| Accrued (unbilled) receivables | 41.9 | 39.2 | 40.0 | 34.0 | 33.0 | 35.2 | 24.1 |
| Long-term instalment receivables | 26.9 | 13.0 | 9.3 | 0.8 | 2.1 | 1.0 | 1.0 |
| Total Receivables | 119.4 | 109.2 | 110.5 | 101.2 | 93.1 | 78.7 | 69.8 |
| Net Income | 10.9 | 8.3 | |||||
| Cash flow from operations | 1.4 | 9.4 | |||||
| CFFO – Net Income | (9.5) | 1.1 | |||||
| DSO Total Receivables | 118 | 112 | 116 | 107 | 107 | 104 | 89 |
| DSO unbilled & long-term receivables | 68 | 53 | 52 | 37 | 40 | 48 | 32 |
Issues:
Accrued receivables are rising much faster than revenues & long-term receivables rising dramatically through 2021, potentially indicating highly aggressive income recognition policies relating to long-term system development contracts. The deteriorating liquidity is shown by the rise in DSO figures.
This rise is considerably in excess of the rise in revenue and is accompanied by a fall in cash flow from operations, which by 2016 is lagging well behind profit.
If income has been recognised earlier than would be appropriate, this would mean less revenue would show in future periods, thereby showing apparently worse performance in these periods.
Maintaining the revenue and profits growth in future periods would therefore be even more challenging.
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