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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (40161)11/19/2010 1:00:14 AM
From: Jurgis Bekepuris  Read Replies (1) of 78464
 
HEAT slow to collect payments, too slow given rise in a/r, but customers seem solid industrial end-users from what I can understand. Inventory growth in excess of sales growth is a red flag, yes. I suspect cash reduction means company is using cash to build inventory. That's okay, if they can sell product.

Would be reasonable if it was not so common. Let's jack up the sales and earnings by giving customers free credit! Who cares that we bleed cash. Yeah, great policy. As if we don't know how it ends. Show me one Chinese company that did well with swelling AR, inventory and negative OCF. LTUS might be the only one that managed to get this under control without huge dilution, lost sales and share collapse and even for them the jury is still out.

Your call to invest though.
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