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Technology Stocks : Westell WSTL

WSTL 5.640

+1.3%

Nov 25 3:53 PM EST

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To: Sir Auric Goldfinger who wrote (20088)	8/16/2000 6:02:22 PM
From: sargent	Read Replies (3) of 21342

Auric, Quick accounting question for you: You sell a widget for 1 million, but the quarter/year ends and you have not received the money yet (you have a legal contract though with the reputable buyer). The widget has been delivered to the buyer. The widget cost you 700,000, which you have already paid for. You buy a piece of machinery for 400,000 to create more widgets, since it is apparent that the demand for these widgets will increase over the next four years. The machinery will be amortized over the course of the next 8 years. You have paid in full for the machinery. Have you made money, lost money, or broke even for the quarter??? Answer below: You made money this quarter/year, but cash flow is negative. What is so difficult about this accounting concept? Pretty basic stuff - better check with BWAC for future tips....

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