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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 4:40:45 PM
From: Wyätt Gwyön  Read Replies (2) of 77397
 
re: Inventory levels and receivables,

Looks healthy to me.

I'm not so sure. The cash flow statement shows:

                       2000      1999     
Accounts receivable   (1043)    45
Inventories           (887)     (443)
--------------------------------------
Adding these together:
A/R + Inv             (1930)    (398)


So changes in the operating cycle, and the levels of AR and inventories, resulted in a deduction of (1.93)BB from cash flow in FY00, compared to (.398)BB in FY99. In particular, A/R has gone from a positive item to a billion+ negative item.

Meanwhile, among contributions to cash flows, we have:

Tax benefits from employee stock option plans
                       2000      1999     
                       2,495     837


That is, an increase of 1.658BB, or an increase of almost threefold.

So the operations-related items--namely inventories and receivables--have worsened, even as the main contributor to the cash flow increase is "tax benefits". Ideally, one would like to see cash flows improving due to operation-related items.

All "free cash flows" are not created equally.
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