Looks like sometimes the Cash gets double counted in Cash & Equivalents.
For example, look at AAL. The latest Q has Cash and Equivalents of 4,857, but the correct answer is 4,674. The difference is cash being double counted at 293.
AAL reports a restricted cash and short-term investments line, and CompuStat is reporting that as cash and equivalent. $293M cash + $4,381M short-term invesments + $183M restricted cash and short-term investments=$4,857M cash and equivalents.
ahh ok thanks
Why would restricted cash be reported as part of cash and equivalents?
Restricted cash is “…money that is held for a specific purpose and therefore not available to the company for immediate or general business use.”
In what other category should it be apart of?
AstNonCurOther() is probably a better place, but that’s a legacy CompuStat issue.
I concur with primus, and I would also point out that it is reported as a current asset on AAL’s balance sheet. This is a situation where CompuStat is torn between the need to standardize the numbers across many companies and the need to accurately reflect the subtotal lines. The only other place that it could really go into would be Other Current Assets, but I think that’s worse, personally.
So why did CompuStat not keep it as a separate line item, like it is on the financial statements?
For example, AdvFN lists it independently:
https://www.advfn.com/stock-market/NASDAQ/AAL/financials?btn=annual_reports&mode=company_data
IMO, restricted cash should not be used when computing enterprise value. It’s simply not available.
On a legacy basis, CompuStat should by default include legally restricted cash in AstNonCurOther().
Here are a few exceptions:
[]Restricted cash will be included in CashEquiv() when it is cash in escrow (unless legally restricted, in which case it is included in Current Assets - Other).
[]Restricted cash could also show up in InvestST() when it is cash segregated under federal and other regulations or restricted cash (when shown as a current asset)
Whether the latter form of restricted cash shows up in CashEquiv will depend on how P123 normalizes the data (i.e., if adds short-term investments to cash to find cash and equivalents when the latter is missing or N/A).
So, to answer your question, the proper classification of restricted cash is somewhat ambiguous according to CompuStat’s own rules.
But then again, this is all going off legacy processes and rules. I’m am not sure what has changed since Capital IQ bought out CompuStat–they’ve been keeping an airtight lid on the sausage factory since then.
And there’s also the possibility that CompuStat is not following its own rules as closely as it should. In fact, CompuStat’s data acquistion team has been outsourced (to Bangladesh, I think), so there’s the possibility that language barriers could become an issue.