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Non-Tech : RECY Looking Good... A -- Ignore unavailable to you. Want to Upgrade?

To: Zeus549 who wrote (4274)	3/6/1998 12:52:00 PM
From: TobaccoMan	Read Replies (1) \| Respond to of 7006

Grammy and Lee, I appreciate your continuing and educational discussion. Lee's point about replenishing scrap inventory should definitely be looked into. A local scrap dealer who was selling his business used a similar ploy to convince the buyer that business was great and cash-flow was dramatically improving. The dealer was simply moving excess inventory at better prices while not actively purchasing new scrap (waiting for the sale). The dealer got away with some easy pocket change on the deal and the buyer has to work harder to pay the debt. Any opinions and thoughts appreciated. Regards, Tob

To: Zeus549 who wrote (4274)	3/6/1998 1:11:00 PM
From: David Graham	Read Replies (1) \| Respond to of 7006

Lee: Now I understand what this is all about. Yes, I would agree if margins were to stay at a fixed percent and the price went down there would be less profit. As i do this for a living ( maintain my profits in a fluctuating market ) I understand management has to keep a competitive advantage. I don't have any first hand knowledge of inventory depletion. From what I know of management, that would be a huge surprise. I personally have seen scrap yards piled high and deep with un-usable scrap and without confirmation would guess that what appears to be depletion would be just cleaning up. This is a requirement of the EPA for a sale. Grammy

To: Zeus549 who wrote (4274)	3/7/1998 2:20:00 AM
From: HardMoney	Read Replies (1) \| Respond to of 7006

Lee, If I buy 100 apples at: $4.00/apple=$400 of Cost of Goods Sold (COGS) If I sell them at $6.00/apple my Tot. Rev= $600.Profit =$200...33%GM BTW, my company has 1000 shares outstanding so my eps is $0.20/share If I buy 100 apples at: $5.00/apple. My COGS= $500 If I sell them for $7.00/apple Tot. Rev.=$700-500COGS=$200 Profit=28.5%GM With 1000 shares outstanding my eps is $0.20/share. While this doesn't take into account SG&A, production costs can be adjusted for demand. If the price of scrap (apples) should fall then while it is true that Tot.Rev will decline...it is also true that COGS will decline ie. managing margins to keep earnings less volatile. If retail scrap (apples) falls to $4.00, then I will assume wholesale probably falls to around $2.00. Recy is a value added distributor of a commodity it is NOT a comodity producer....they can manage their margins to keep EPS in line. Just MHO, Frank