We owe $304 million more than we have...but don't tell anyone, okay? One of the fastest-growing companies in history, Groupon, is running low on cash.

The company is not broke. It can also presumably raise additional capital in the private markets if its IPO gets further delayed.

But Groupon's cash cushion relative to its liabilities is small--and the gap between the two is going the wrong way fast.

As of last quarter, Groupon was still cash-flow positive. If it remains that way until after the IPO, the cash situation won't become critical. If the company stumbles, however, or the economy suddenly turns south, Groupon could get into serious trouble in a hurry.

Here are the details...

On the surface, things look great: As of June 30, Groupon had $225 million of cash. Despite losing $103 million in Q2, moreover, the company actually generated about $25 million of free cash flow in the quarter. So a cash crisis would seem to be the last thing the company needs to worry about.

But the devil--and danger--is in the details.

Groupon is able to generate cash while losing money because it collects cash from Groupons the moment it sells them and doesn't have to pay some of the cash to merchants until 60 days later. When the company is growing rapidly, it generates a lot more cash from new Groupon sales than it has to pay out to redeem old Groupons. Right now, Groupon is growing so quickly that this "float" creates positive cash flow even though the company is losing money.

The trouble is that the cash Groupon generates from the Groupon sales is not all Groupon's to keep. It owes a big chunk of that cash to the merchants it sells Groupons for. And at the end of Q2, Groupon owed a lot more cash to merchants than it had on hand.

Specifically, as of June 30, Groupon owed $392 million to merchants for old Groupons--way more than the $225 million of cash the company had on hand.

And merchant bills aren't the only bills Groupon has to pay.

As of June 30, Groupon had $680 million in current liabilities--bills the company has to pay. Meanwhile, Groupon only had $376 million of current assets with which to pay them (composed mainly of cash and receivables).

Another way of looking at this is that, if Groupon had been liquidated as of June 30, the company would have had a net of $304 million of bills that it would have been unable to pay.

The technical accounting term for this is a "working capital deficit" or "negative working capital." A company has a working capital deficit when it owes more in near-term bills than it has cash available to pay. Companies can operate with a working capital deficit as long as they have another source of cash to cover the bills as they come due.

Right now, Groupon has this source of cash: rapidly growing Groupon sales. As long as Groupon sells enough new Groupons in one quarter to pay all the bills it racked up in the prior quarter, it will not need additional cash.

But if the company's growth stumbles, or if competitive pressure leads to Groupon's gross profit margin getting squeezed, look out. Under those scenarios, 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.

Meanwhile, the longer Groupon goes without raising additional capital, the more its working capital deficit will increase--even if its growth doesn't slow.

In the past three quarters, for example, Groupon's working capital deficit has grown rapidly, as follows:

Q4 2010: -$197 million

Q1 2011: -$229 million

Q2: 2011: -$304 million

The simplest way to think about this working capital deficit is as a short-term loan. In Groupon's case, the loan is being extended mainly by Groupon's merchant partners. (Importantly, the amount of this loan factors in the $225 million of cash Groupon has. This is what Groupon owes after netting out that cash.)

Another way of looking at this situation is that the first $304 million of cash Groupon raises from its IPO will go to paying off Groupon's creditors.

Does Groupon have enough cash to make it to its IPO?

Yes, if the company's torrid growth rate can be sustained.

If Groupon's growth slows sharply, however, the company could quickly face a cash crunch--as those $300+ million of bills come due before Groupon accrues the cash necessary to pay them.

And this would be a good time to note that some of the fundamental metrics in Groupon's second quarter were not encouraging.

It is also worth noting that, in the history of the company, Groupon has raised a total of $1.1 billion of cash--and paid out $942 million of that cash to its early investors and executives (highly unusual for such a young company). If Groupon does get into cash trouble, therefore, it will not be because the company didn't discover an amazing new business opportunity or raise all the capital it needed. It will be because of, well, greed.

SEE ALSO: Believe It Or Not, Groupon Is Cash-Flow Positive