I noticed something strange in the latest financials for NVIDIA. While they have been posting impressive revenue numbers, their Accounts Receivables (AR) has gone up dramatically. I believe that NVIDIA may face cash flow risks if their customers never pay. I do not believe that this risk is priced in currently.

Below is a table that I will be referencing

Accounts Receivable and Cash Flow Discrepancy

One of the most unusual aspects of NVIDIA’s recent financials is the large gap between their reported revenue and the cash they’re actually collecting. As of their most recent quarter, NVIDIA’s Accounts Receivable (AR) has ballooned to an eye-popping $14 billion. For context, that represents approximately 68% of their quarterly revenue, which is unusually high for a company with NVIDIA’s financial profile.

Typically, rising AR means that while NVIDIA is recognizing revenue from sales, they haven’t actually collected the cash from customers yet. This discrepancy could spell trouble if those clients delay or default on payments. In other words, NVIDIA’s high AR figure suggests they may be relying heavily on extended payment terms or even customer financing arrangements, which can boost revenue in the short term but might introduce cash flow risks down the line

MORE:

medium.com/@benitodenaro/nvidia-people-are-paying-you-right-386fb9d6dc18