In the year of 1999, Xerox struggled with poor performance and liquidity pressure. The pressure on Xerox’s management was mounting as analysts called for a strong year-end cash balance. As a result, Xerox instructed its worldwide operations to factor its receivable and a total $288 million of factoring transactions were completed. In the financial statements of 1999, the company reported a positive year-end cash balance of $126 million and did not disclosure these factoring transactions.

Answers the following questions to form your opinion about Xerox’s 1999 reporting decision provided above.

What is the approximate cash balance before factoring transactions?

What are the benefits of factoring receivables compared to holding the receivable for collection? What are the downsides of factoring receivables?

Is it okay to not disclose these factoring transactions? Why Xerox did not disclosure the information?