Re: [CANSLIM] Current Case Study - XRAY

From: RWElmer@aol.com
Subject: Re: [CANSLIM] Current Case Study - XRAY
Date: Thu, 8 Aug 2002 21:03:08 EDT

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Hello Katherine,

Thanks for responding to this. Opportunity here to fill in some huge gaps in
my education. Why wouldn't a drop in cash flow from qtr. to qtr. be
important, even cumulatively? It would seem to me that you'd want to see a
steady progression. If you have a reference that discusses this issue, I'd
love to read it as this is an area I'm just starting to pay attention to. In
the meantime ... on the surface increased inventories and receivables would
not seem a good thing, but they did not seem to outpace earnings or revenue
growth, so that seems OK. Agree?

On a related issue, and I've been wanting to ask you this for a while, I have
seen you say that one should look for cash flow to approximate earnings, to
minimize the possibility that earnings are being manufactured through
creative accounting. So, looking at this 12.4 million in operating cash flow,
am I comparing it to the trailing 12 months earnings of 120.2 million or am I
misunderstanding how you do this? I use MSN for a good deal of my DD, so it'd
be helpful to me to use the numbers there for our discussion. I was not
thrilled with their Help menu, however, and am therefore hoping you have some
better sources of info that speak to the issues raised.

I appreciate your time.

Best Wishes,

Robert W. Elmer

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<HTML>Hello Katherine,
 
 Thanks for responding to this. Opportunity here to fill in some huge gaps in my education. Why wouldn't a drop in cash flow from qtr. to qtr. be important, even cumulatively? It would seem to me that you'd want to see a steady progression. If you have a reference that discusses this issue, I'd love to read it as this is an area I'm just starting to pay attention to. In the meantime ... on the surface increased inventories and receivables would not seem a good thing, but they did not seem to outpace earnings or revenue growth, so that seems OK. Agree?
 
 On a related issue, and I've been wanting to ask you this for a while, I have seen you say that one should look for cash flow to approximate earnings, to minimize the possibility that earnings are being manufactured through creative accounting. So, looking at this 12.4 million in operating cash flow, am I comparing it to the trailing 12 months earnings of 120.2 million or am I misunderstanding how you do this? I use MSN for a good deal of my DD, so it'd be helpful to me to use the numbers there for our discussion. I was not thrilled with their Help menu, however, and am therefore hoping you have some better sources of info that speak to the issues raised. &nbsp;
 
 I appreciate your time.
 
 Best Wishes,
 
 Robert W. Elmer
 </HTML>

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