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

To: Paul Senior who wrote (33020)12/12/2008 2:27:18 PM
From: hoyasaxa  Read Replies (1) | Respond to of 78751
 
A/R- A greater discount to the price one is willing to pay for a company with rising A/R and higher DSO is warranted. Customer risk is growing as you noted. If I buy a company for assets today and value those assets (a/r, inv among them)without a sufficient discount when the transaction closes those assets might be worth significantly less if the a/r cannot be collected and the inventory is now worth lower because materials prices have dropped a lot from where the inventory purchased.. just something to consider, esp when valuing hard goods distributors...



To: Paul Senior who wrote (33020)12/13/2008 11:01:24 AM
From: Mark Marcellus  Read Replies (1) | Respond to of 78751
 
To me DSO is not so much a valuation metric as a go/no go metric. If you're investing in a large number of stocks using valuation formulas, I agree it's of little use. In that situation you're probably better off using balance sheet metrics that exclude A/R and inventory.

However, if you're looking to evaluate the ongoing quality and performance of a retailer or distributor, DSO and DSI are very important.


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