Difference between undiscounted cash flows and discounted cash flows

[Table of Contents](#ica158fb683c247fdb170955b492f9216_7)HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | As of October 31, |
|   | 2021 |  | 2020 |
|   | In millions |
| Minimum lease payments receivable | $ | 9,526  |  |  | $ | 9,448  |  |
| Unguaranteed residual value | 390  |  |  | 364  |  |
| Unearned income | (718) |  |  | (754) |  |
| Financing receivables, gross | 9,198  |  |  | 9,058  |  |
| Allowance for credit losses | (228) |  |  | (154) |  |
| Financing receivables, net | 8,970  |  |  | 8,904  |  |
| Less: current portion | (3,932) |  |  | (3,794) |  |
| Amounts due after one year, net | $ | 5,038  |  |  | $ | 5,110  |  |

As of October 31, 2021, scheduled maturities of the Company's minimum lease payments receivable were as follows:

|  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |
|  | As of October 31, |
|  | 2021 |  |  |
| Fiscal year | In millions |
| 2022 | $ | 4,338  |  |  |  |
| 2023 | 2,557  |  |  |  |
| 2024 | 1,567  |  |  |  |
| 2025 | 747  |  |  |  |
| 2026 | 233  |  |  |  |
| Thereafter | 84  |  |  |  |
| Total undiscounted cash flows | $ | 9,526  |  |  |  |
|    Present value of lease payments (recognized as finance receivables) | $ | 8,808  |  |  |  |
|    Difference between undiscounted cash flows and discounted cash flows | $ | 718  |  |  |  |

Sale of Financing ReceivablesThe Company entered into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. During the fiscal years ended October 31, 2021 and 2020, the Company sold $142 million and $103 million, respectively, of financing receivables. Credit Quality IndicatorsDue to the homogeneous nature of its leasing transactions, the Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risk. Credit risk is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographic regions. The Company evaluates the credit quality of an obligor at lease inception and monitors that credit quality over the term of a transaction. The Company assigns risk ratings to each lease based on the creditworthiness of the obligor and other variables that augment or mitigate the inherent credit risk of a particular transaction and periodically updates the risk ratings when there is a change in the underlying credit quality. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease, and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits.104
