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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (38369)	7/24/2002 10:54:18 PM
From: patron_anejo_por_favor	Respond to of 52237

You're point about inventory turns decreasing need for capital, but increasing inventory turns across an industry given no one producer an advantage...in a disinflationary scenario, what happens is pricing power is also reduced due to having multiple, similarly-enabled competitors. So it does not follow that "earnings double when inventory turns are doubled"...certainly it benefits a company with high fixed costs, but not nearly to the degree that you've implied. Moreover, much of the source of disinflation in the 90's had to do with relocating manufacturing basis overseas, in order to benefit from lower labor costs, and not due to IT or other "productivity enhancers" that cause higher inventory turns. And that's a one-time benefit...