Dave,
However, one comment with respect to their cash flow. Are you just singling out AR and Inventories?
In the post copied below, AR and Inventories were a drag on cash flow YoY. But that is not apparent in the bottom-line cash-flow number, due to growth from other sources. In terms of cash-flow growth, I would look more at the effects of non-operating items, which seem to be the major component of this incremental growth. I discussed that in the following post--note in particular how "tax benefits" grew year over year, as detailed toward the bottom of the post. I don't think anyone would argue that the desirable source of cash-flow growth is recurring operations.
Message 14642739
To:The Phoenix who wrote (41361)
From: Mucho Maas Monday, Oct 23, 2000 4:40 PM
View Replies (2) | Respond to of 47524
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. |
