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Technology Stocks : Corel--$100 in 1998

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To: Scott Volmar who wrote (2009)	3/30/1997 4:15:00 PM
From: Michael Burry	of 2329

Re: AR The key ratios to look at are the AR/AP and the AR/Sales. The danger in the AR/Sales spiking is that it may be a warning it will not be able to meet its AP due to default. Hence, the AR/AP gets relevant. Some companies run chronically high AR/AP's that enable them to run chronically high AR/Sales. I will look at the software industry and do similar comparisons, to post on the Corel profile on my web site. Going back, this is what we have. Quarter 1 97 AR/Sales 1.40 vs. 1.76 (Q1 96) vs 1.45 (Q1 95) -- not out of line. AR/AP 10.3 vs. 4.3 (Q1 96) vs. 7.8 (Q1 95) -- all not worrisome. Quarter 4 96 AR/Sales 1.09 vs. 1.00 (Q1 95) AR/AP 7.8 vs. 14.8 (Q1 95) Quarter 3 96 AR/Sales 1.15 vs. .97 (Q3 95) AR/AP 9.9 vs. 17.1 (Q3 95) Quarter 2 96 AR/Sales 0.98 vs. 1.29 (Q2 95) AR/AP 10.6 vs. 12.9 (Q2 95) To recap, AR/S is 1.4 v 1.1 v 1.2 v 1 v 1.8 v 1.0 v 1 v 1.3 v 1.5 going back. AR/AP is 10.3 v 7.8 v 9.9 v 10.6 v 4.3 v 14.8 v 17.1 v 12.9 v 7.8 Note this Q is not out of line. There is no AR/Sales spike that is out of wack with history or its AP. In fact, the last 3 years Q1's have had faux spikes. The AR/AP is a less precise measure, but one can see that we have strong multiples across the board going back. There are other issues in this balance sheet, but I wanted to isolate this one for analysis. Comments welcome. Mike

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