Re: [CANSLIM] DFXI

From: Spencer48@aol.com
Subject: Re: [CANSLIM] DFXI
Date: Tue, 2 Apr 2002 11:05:54 EST

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RW:

     Just a quick reply:  Katherine E-mailed us a Barron's article (April 1; 
it's called: Accounting Know-How.  BTW-A very nice article.  Thanks, 
Katherine.) which said, in part, that high receivables could indicate that 
the company is selling its product, but does not mean that it is actually 
earning any cash.  Cash-Flow should be checked to see if  the receivable are 
being paid.  
     Also, one would want to check on Receivables Turnover (In the article, 
the Columbia Accounting Professor says, "To calculate this number, divide 
revenues by receivables, and multiply the result by the number of days in a 
quarter. Then compare that results with the company's, and competitors' 
historic trends. If days' sales outstanding increase significantly, the 
company may be pushing products or services on customers who can't pay, or 
don't want the goods, which is what Sunbeam did several years ago. Companies 
that "stuff" their customers' inventories in such fashion have a tough time 
in future quarters.").

     As far as inventory is concerned:  An increase in inventory could mean 
that sales are brisk.  It also could mean that sales are not brisk, but 
rather are hoped by the company to be brisk.  A rise in inventory (without a 
rise in Sales) could suggest that the company is using its cash resources 
inefficently.  Or it could also suggest that the company's is not selling its 
product as fast as it would like.

     Also (although you didn't ask for one), I'll give you a friendly tip): 
Saying one doesn't know is one thing; but saying that one is too busy to fool 
around with "financials" is another, and I believe implies that the time of 
others who answer your question is unimportant to them.

jans  

In a message dated 4/1/2002 11:53:39 PM Eastern Standard Time, 
RWElmer@aol.com writes:

<< This is a general message regarding DFXI. 
 
 There was something else that bothered me when I first bought DFXI, but 
 obviously not enought to stop me from pulling the trigger =0) I went back 
and 
 looked over the numbers and what troubled me before popped out again, on the 
 Quarterly Balance Sheet. I'm looking on the MSN Financials and I see that 
 Receivables and Inventory took a dramatic turn up form the 6/01 Qtr to 9/01 
 Qtr. Inventory was up over 70% and Receivables had more than tripled!!! I 
 didn't know if this had to do with absorbing some Stairmaster accounts, or 
 something similar, but thought I'd mention it in the event someone else 
found 
 the subject interesting enough to take up. I'm not well versed in accounting 
 and am too busy to get that deep into the Financials. Would be interested in 
 any thoughts on the subject though.
 
 Best,
 
 Robert W. Elmer
 Coldwell Banker First Shasta
 2837 Bechelli Ln.
 Redding, CA 96002
 RWElmer@aol.com
 221-9556 or 1-800-348-7939 ext.156
 www.robertelmer.com >>

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