As of its last SEC filing, the group-discount-coupon company Groupon reportedly owed merchants $392 million. Unfortunately, it only has $225 million in the bank – not great. Additionally, the company owes $681 million in current liabilities, but only has $376 million in current assets. Folks, this does not bode well for the coupon retailer.

Groupon won’t be going under – at least not yet – because it can keep paying old liabilities with money generated by creating new liabilities. That is, they can pay off old debts with revenue from new Groupons. However, Business Insider points out that “the company may not be able to sell enough new Groupons  to pay off its old bills, and then it will face a serious cash crunch.”

Speculation points that the company using a large percentage of its funding for executive bonuses rather than saving it as cash reserves could be part of the problem. Since the announcement, Groupon’s shares have dropped by 20%. Interestingly, the company has also announced that it is replacing its sales chief. In order to stay afloat, Groupon needs strong cash flow from new and upcoming sales.

source 1 source 2 photo

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