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  "documentTitle": "MGP Ingredients, Inc. (MGPI)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2017-01-12 00:00:00",
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  "notes": "The slide uses a 'before-after' logic by comparing 'Stated Current Ratio' vs 'Adjusted Current Ratio'.",
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      "text": "By adjusting MGPI's balance sheet to remove the effect of long-term whiskey holdings, and include off-balance sheet purchase order commitments, we observe that its liquidity (as measured by its current ratio) to be significantly worse than it appears on the surface.",
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      "text": "current ratio: 0.7x",
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      "text": "MGPI states in its Annual Report the following in its discussion of inventory accounting: \"Bourbon and whiskeys are normally aged in barrels for several years, following industry practice; all barreled bourbon and whiskey is classified as a current asset.\" But wait a second, how can an asset that is intended to be held for more than a year be classified as current? A current asset is generally defined as an item that can be converted to cash with one year. (1) By adjusting MGPI's balance sheet to remove the effect of long-term whiskey holdings, and include off-balance sheet purchase order commitments, we observe that its liquidity (as measured by its current ratio) to be significantly worse than it appears on the surface.",
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      "text": "Bourbon and whiskeys are normally aged in barrels for several years, following industry practice; all barreled bourbon and whiskey is classified as a current asset. — MGPI Annual Report",
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      "text": "Source: MGPI Financials (1) Definition of \"Current Asset\" (2) Disclosed in Note 3 \"Commitments and Contingencies\" as open purchase order commitments generally extending out 1 year",
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      "text": "Table showing Current Assets, Whiskey Distillate adjustments, Liabilities, and Purchase Obligations across 5 periods, resulting in Adjusted vs Stated Current Ratios.",
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      "text": "MGPI's Liquidity Is Worse Than It Appears",
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