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

To: pcyhuang who wrote (27194)	7/4/2007 1:36:54 AM
From: Mark Marcellus	Read Replies (2) \| Respond to of 78717

Let's take a closer look at RUSS's balance sheet. it is true that it has about $2.50 net cash per share. But have you noticed that its book value is a -$3.893 per share. pcyhuang, if you actually look at the balance sheet and the notes, instead of cut and pasting from Yahoo, you'll see that the bulk of the liabilities is deferred revenue - in this case money the company has received in advance of students attending courses. Once the student attends the course, the deferred revenue account is reduced and the money goes to cash. At the end of 2006, deferred revenue was about 127M and recorded as a liability. Deferred course expenses, consisting of payments to the speakers who conduct the courses, were about 15M. I'd say that this 127M is a wee bit different than 127M in, say, Accounts Payable. There is the not so small issue of whether the financial statements can be trusted. There is certainly room in there for a dishonest management to play games with the numbers. Uncovering financial fraud is not really in my circle of competence, so my rule is to stick with companies that have management I can trust. However, this is a case where I might be willing to make an exception. Welcome back James, it's always a pleasure.