John,
Basicly by growing inventory 1.6 B$ they DECREASED COGS by 1.6 B$. So Net Income was overstated (with respect to actual cash into the business) by 1.6 B$.
All this math, must digest. Ok, I assume that Cisco is FIFO, correct?
If so, let me expand and u tell me whether i'm right or wrong. By Cisco expanding inventory, most likely the cost of purchasing that "stuff" (for lack of a better word) was higher. Thus, it will cause Cisco's CGS to increase (assuming they sell the same amount of "stuff"), this Q. Due to the downturn, I guess we should assume that ASP will go or flat. Therefore, with the rise of higher cost "stuff" last Q, that translates into a higher CGS?
Am I on the rigth path? Thus NI will be lower this Q, however, OCF will improve due to the decrease in inventory.
I understand that AR needs to be watched, but why the "tax benefit for stock option"
Thanks,
dave |
