Andy,
Here are a few points regarding your post #872.
1.) Per Andy:
"revenue is recognized when customer enter contract
agreement. however sales are recognized by the delivery of
the merchandise. (please refer to cube annuual, don't ask me
where i get this info again) this is why there was no number
for cube sales in the 1 Q 1996.
Per the 1995 Form 10-K:
Revenue Recognition - The Company records product sales to customers and distributors at the time of shipment.
For your clarification Andy: Aside from the small percent (1%)
of revenues reported by the "percentage of completion method",
Sales = Revenues . as they relate to published income statements.
2.) per Andy:
Q1 1996 net income 13,581,000.
Q1 1996 receivables 37,893,000
Q4 1995 receivables 24,421,000
37,893,000 - 24,421,000 = 13,472,000 (amt of receivables received
in 1Q) compare this # to the net income.
this # indicates that cube was PAID manufacturer's cost when OEM's
ordered their chips."
Per me:
I agree with your raw numbers Andy, but not your conclusions.
The fact that the 1st qtr net income is approximately = to the
increase in receivables is merely a coincidence.
As I posted earlier, the recognition of sales / revenues has
nothing to do with collection of the cash. (unless receivables
are uncollectible)
A better analysis would be :
a) is the increase in receivables consistent with the increase
in sales? In Cubes case, sales increased 35% comparing 1st qtr
96 to 4th qtr 95 while the receivables increased 55%.
A cause for concern? Possibly. Are their customers paying up?
3.) Per Andy:
"receivables are supposed to be collected before the end of the
fiscal year. the amount of receivables that were in the account
by the end of 1995 refers mostly to long-term contract agreements."
Per me:
As long as the company is a "going concern" and they extend
credit to their customers, they will have receivables at the
end of every month. (even at year end!) Unless you have
access to specific contracts that contradict this, how can
you make the above statement?
Per Cube's 1995 Form 10-K
"Concentration of Credit Risk - Almost all of the Company's
trade accounts receivable are derived from sales to manufacturers in the consumer electronics, computer and
communications markets."
Steve |
