Manchester Interactive Marketing addresses that as of June 30th, Groupon had £410M in current liabilities and bills the company has to pay. Meanwhile, they only had £227M of present assets with which to pay them. In other words, if Groupon had been liquidated as of June 30, they would have had a net of £183M of bills that they would have been unable to pay: a working capital deficit. Companies can operate with a working capital deficit as long as they have another source of money to cover the bills as they come due. At the moment Groupon has this source of cash: rapidly growing Groupon sales. As long as they sell enough new daily deals in one quarter to pay all the bills it racked up in the prior quarter, they will not need additional cash. But if the company's growth slows, or if competitive pressure leads to their gross profit margin getting pressed, look out. Under those scenarios, the company may not be able to make enough new sales to pay off its old bills, and Manchester Interactive Marketing believe they will then face a serious cash issues.
Groupon need to step up their game in the upcoming quarter to remain cash rich, Manchester Interactive Marketing think as long as they keep releasing the best deals they will keep their head above water, and if not, then maybe we will be seeing a daily deal for the price of buying out Groupon.
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Manchester Interactive Marketing is a leading sales and marketing company based in Manchester. http://www.manchesterinteractivemarketing.co.uk/