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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: AlienTech who wrote (1781)	12/6/1997 2:03:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 6021

Alien, DSO is one of those almost universally misunderstood tools that financial analysts use. It's primary use is to see if a company is experiencing slow payments from it's creditors, and thus is at risk. A secondary use is to determine if it is booking sales which are not really sales, but stuffing the channel. The third use is to determine if a quarter is "back-end" loaded; that is, the bulk of the sales come at the end of the period (presumably with large discounts) for the purpose of making results in the current period look better. Unfortunately, DSO is useless in discriminating among these possibilities (and other more benign explanations). That's why no financial analyst or credit analyst worth his salt puts any credence in DSO. The only time that DSO by itself signals a problem is if it looks as if the company will experience a cash shortfall, or if growth is unsustainable due to a long receivables period. So, to say that there was a "DSO problem" is really meaningless. Regards, Paul