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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 71.08+0.1%Nov 7 9:30 AM EST
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To: The Phoenix who wrote (41361)10/23/2000 4:15:03 PM
From: Wyätt Gwyön   of 77397
 
Inventory turns remained at 7.8 days. Receivable days went from 32 to 37 days.

Inventory turns does not refer to a number of days. It is the number of times inventory turns over within the year. Divide 365 by that number to get days of inventory. I will check on the 55-65 figure. In any case, using 7.8 turns, that implies ~47 days. Receivables increases by five days, meaning the operating cycle (days inventory + DSOs) rises to 84 from 79--not favorable. Also keep in mind that receivables and inventories increased in excess of revenue increase, which may have something to do with the falling margins.
From the 10-K:

Accounts receivable increased 83.9% during fiscal 2000. Days sales outstanding
in receivables increased to 37 days for fiscal 2000, from 32 days for fiscal
1999. The increase in accounts receivable and days sales outstanding was due, in
part, to growth in total net sales combined with conditions in a number of
markets, resulting in longer payment terms.

Inventories increased 87.2% during fiscal 2000; however, inventory turns
remained constant at 7.8 times. The increase in inventory levels reflected new
product introductions, continued growth in our two-tier distribution system, and
increased purchases to secure the supply of certain components. Inventory
management remains an area of focus as we balance the need to maintain strategic
inventory levels to ensure competitive lead times with the risk of inventory
obsolescence due to rapidly changing technology and customer requirements.
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