Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (21081)	4/8/2005 7:54:45 AM
From: Mark Marcellus	Respond to of 78464

Thanks for the reply Spekulatius. I think I'm going to be struggling with this one for a while. the negative working capital is really a good thing since it means that WMT collects it's money faster than it pays it's suppliers. I understand that, and as I said I'm sort of okay with the Accounts Payable piece of it. I do worry about what would happen if their suppliers (especially their foreign suppliers) become more stringent in their terms, particularly if this were to happen at a time of slowing demand that puts pressure on inventories. That being said, it's the Accrued Liabilities piece that really has me flummoxed. I don't understand why, based on the way they are described, those hedges are carried as liabilities. If they are real liabilities, I need to understand what they are and how they are structured. If they are not, I need to understand the accounting, because it sounds crazy. The 12B$ sounds like a huge number but WMT has about 50B$ in revenue abroad which puts that number in perspective. At the end of the day (c.p.) the $50B turns into about $1.5B on the bottom line, which puts the $50B in perspective. I agree that if current conditions continue, WMT is a great business and a great buy. However, if one believes (as I do) that we could face severe dislocations as the U.S. Current Account deficit unwinds, it is important to understand the worst case scenarios.