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.

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

To: santhosh mohan who wrote (1783)	12/6/1997 2:36:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 6021

Santosh, I cannot come up with any other benign explanation for an increase in DSO. Can you elaborate? Sure. Here are two: (1) Suppose a company tries to stimulate additional sales by liberalizing it's payment terms. DSO will increase. The positive is that profits increase! (2) Suppose a new product or new sales initiative begins to bear fruit towards the end of a quarter. Or put another way, sales pick up towards the end of a reporting period. Again, the positive is that profits increase! I think this DSO fixation began when someone took a course in financial analysis and read the famous Scott Fertilizer case, in which Scott had "stuffed" the channels and recorded this as a sale, but was then required to reverse these "sales" when product was returned from the retailers and distributors at the end of the season. The classic symptom was an increase in DSO. Unfortunately, a simple increase in DSO was substituted for critical thought by many "analysts" who frequently flagged increasing DSO as a problem without analyizing the cause. In fact, the "problem" may be a positive for the business. Regards, Paul