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Technology Stocks : Lucent Technologies (LU)

LU 2.650

-2.9%

Nov 14 9:30 AM EST

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To: elmatador who wrote (8983)	8/3/1999 12:15:00 PM
From: Chuzzlewit	Read Replies (2) of 21876

Good point! But there are multiple facets to this. My understanding is that in Europe a longer receivables period is the norm. On the other hand, that does not imply that inventories cannot be substantially decreased relative to where they are currently. There is a simple metric called the cash conversion cycle, used by Dell to measure the operational efficiency of a company. It is a measure of how quickly an organization can convert an order into cash. It is calculated as: CCC = DSO + DI - DP where DSO is days sales outstanding DI is days inventory DP is days payable If operations increase in Europe mightn't you expect that the payables period would increase (taking advantage of Europe's longer collection period) which would mitigate to some extent the expected increase in DSO? TTFN, CTC

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