Don and others:
On your comment about AR, it looks like they had a large prepayment that got shuffled around as unearned revenue and the amount was added to AR even though it's already been paid.
I, too, don't want to get too caught in VOXX since I don't want to own it yet(if ever) however, your comments sent me back to the 10K, as maybe I overlooked something major, possibly indicating accounting incompetence or worse, which I need to know I overlooked, if I did, as the recognition of those kind of improprieties can be costly to me as you so eloquently stated.
I didn't, however, find what you were referring to. If you would be so kind as to point out where in the 10K you are seeing the "large prepayment" getting bounced around, I surely would appreciate it.
I did, however, find this note to the balance sheet:
Included in accounts receivable at November 30, 1998 and 1999 are trade receivables due from its equity investments aggregating $1,035 and $1,057, respectively. Receivable from vendor includes $833 and $3,741 due from TALK as of November 30, 1998 and 1999, respectively, which represents prepayments on product shipments and interest. Interest is payable in monthly installments at 6.5% on amounts due from TALK. Amounts representing prepayments of $3,500 were repaid via receipt of product shipments in December 1999.
TALK is a subsidiary(partially owned, I think)and what I think VOXX does, is they prepay an amount on orders for goods from TALK. VOXX charges 6.5% interest on the amounts prepaid to TALK. Evidently VOXX has a category in their accounting that is "Receivables from vendor" in which they list the amounts prepaid for goods and the interest accrued to this category until they receive shipment of those goods and payment of the interest. Throughout their financials, as nearly as I can tell, this is always the context they mean when they use the word "prepayment"
Whether the interest on this prepaid amount should be included in Accounts Receivable is kind of "iffy" in my mind. On the one hand, it seems like an investment return entry would be more appropriate, on the other hand, if they pay interest on their payables should they break that out separately as a financing activity? I think, as long as the interest amounts are relatively insignificant, so is the issue for me.
The issue does bring up a good point though....how much of their receivables are due to product prepayments and how much actually due to the sale of merchandise?....If I were more interested, I think I would try to quantify that, because receivables from vendors in which VOXX has an ownership stake are less worrisome in some respects than receivables from enterprises over they have no real control.
As far as cash flow seems to come mainly from selling stock or debt....I think I'll just have to agree to disagree with you on that one for reasons previously stated.
Timba |
