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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

Nov 14 3:59 PM EST

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To: FESHBACH_DISCIPLE who wrote (47900)	2/5/2001 1:13:55 PM
From: Tulvio Durand	Read Replies (1) of 77399

... Now if inventory grows 15% instead of 58% There's flaw in what is presented. If ending inventory is reduced by 540 that means more goods were sold, yet sales 6,519 does not reflect additional revenue from the additional sales. What is assumed is that those goods were given away free of charge. The 540 inventory reduction would have produced an additional 540*1.635=882.9 in sales assuming the same profit margin as in previous sales. Thus, the second case cited becomes, Sales = 6519+882.9 = 7401.9 Cost of goods available 4334 Ending inventory 1416 Cost of goods sold 2918 Gross profit = 7401.9-2918 = 4483.9 Gross profit % = 4483.9/7401.9 = 60.57% ----- ie., gross profit margin remains same as in original case. Tulvio

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