[CANSLIM] P/S ratios

From: "Robin Gridley" <gridley02@earthlink.net>
Subject: [CANSLIM] P/S ratios
Date: Thu, 27 Mar 2003 11:53:19 -0800

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There's another way that Sales can really be jerked around...

It's common practice in distribution for retailers to hold A/P
hostage against returns. The impact is as follows... The distributor/
manufacturer books the sale to the retailer or channel partner and
ships the product. The sale is reported as such on any financials,
along with an accompanying A/R. The retailer/channel partner has
payment and return terms... which are almost always ignored. The
usual end result (especially in a slow market) is that the A/R goes
past-due, the retailer/CP tells the manufacturer/distributor that they
are going to pay in product (product which has long passed it's 
return privileges...), and they haggle it out - usually with the
manufacturer/wholesaler losing and being forced to take product return
in lieu of overdue A/R. You'd be amazed at how long this process
can be milked to the point of almost never having to pay for products!

The net result is that the sales booked in January can easily end up
coming back in August with an accompanying write-off to the A/R asset. 
And it's very difficult to track this through the financials in a way 
that would allow you to predict the real net-sales number.

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