Cogeco 2011 Annual Report Download - page 76

Consolidated financial statements COGECO CABLE INC. 2011 75
Cash and cash equivalents consist mainly of highly liquid investments, such as term deposits. The Corporation has deposited the cash and
cash equivalents with reputable financial institutions, from which management believes the risk of loss to be remote.
The Corporation is also exposed to credit risk in relation to its trade accounts receivable. In the current global economic environment,
particularly in Portugal, the Corporation’s credit exposure is higher but it is difficult to predict the impact this could have on the Corporation’s
accounts receivable balances. To mitigate such risk, the Corporation continuously monitors the financial condition of its customers and reviews
the credit history or worthiness of each new major customer. At August 31, 2011, no customer balance represents a significant portion of the
Corporation’s consolidated trade receivables. The Corporation establishes an allowance for doubtful accounts based on specific credit risk of its
customers by examining such factors as the number of overdue days of the customer’s balance outstanding as well as the customer’s
collection history. The Corporation believes that its allowance for doubtful accounts is sufficient to cover the related credit risk. The Corporation
has credit policies in place and has established various credit controls, including credit checks, deposits on accounts and advance billing, and
has also established procedures to suspend the availability of services when customers have fully utilized approved credit limits or have
violated existing payment terms. Since the Corporation has a large and diversified clientele dispersed throughout its market area in Canada
and Portugal, there is no significant concentration of credit risk. The following table provides further details on the Corporation’s accounts
receivable balances:
2011 2010
(in thousands of dollars) $ $
Trade accounts receivable 74,429 67,189
A
llowance for doubtful accounts (7,242) (7,478)
67,187 59,711
Other accounts receivable 7,567 7,353
74,754 67,064
The following table provides further details on trade accounts receivable, net of allowance for doubtful accounts. Trade accounts receivable
past due is defined as amount outstanding beyond normal credit terms and conditions for the respective customers. A large portion of the
Corporation’s customers are billed in advance and are required to pay before their services are rendered. The Corporation considers amount
outstanding at the due date as trade accounts receivable past due.
2011 2010
(in thousands of dollars) $ $
Net trade accounts receivable not past due 50,133 42,817
Net trade accounts receivable past due 17,054 16,894
67,187 59,711
Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The Corporation manages
liquidity risk through the management of its capital structure and access to different capital markets. It also manages liquidity risk by
continuously monitoring actual and projected cash flows to ensure sufficient liquidity to meet its obligations when due. At August 31, 2011, the
available amount of the Corporation’s Term Revolving Facility was $625 million. Management believes that the committed Term Revolving
Facility will, until its maturity in July 2014, provide sufficient liquidity to manage its long-term debt maturities and support working capital
requirements.