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Non-Tech : Cendant Corporation (NYSE:CD) -- Ignore unavailable to you. Want to Upgrade?

To: VALUESPEC who wrote (239)	4/18/1998 10:28:00 AM
From: Jens	Read Replies (1) \| Respond to of 3627

Motley Fool ref. to accounting: fnews.yahoo.com Jens ------------------ ...."For most manufacturers, there is a value-added component in its inventory, which accounts for the heat, light, labor, and in some instances, the managerial overhead devoted to the process of turning raw materials into finished goods. Inventory could sit on the shelf for months and months without much action on the revenue line. Though the company has disbursed cash for the labor and raw material components found in that inventory, that cash outlay hasn't gone through the income statement. The value of those expenditures can be found as assets on the balance sheet as inventory in the raw materials, work-in-process, and finished goods. Only when it is turned into revenues (or written off) will the cash outlays for inventory be turned into expenses. When some investors seem shocked that there is a fraud being purported because expenses have been stored as assets until the associated revenues are recorded, they should realize that this is all part of the way that modern enterprises account for the flow of cash through the company."... ... "While some feel that Cendant's credibility has really been hurt here, the brands and the cash flow growth are there. That some can't visualize the company's marketing expense accruals as capital expenditures that will generate revenues over a number of periods is interesting, especially in light of the company's very light capital expenditure schedule. This is not hard asset company -- it's a company that owns intellectual property and intangible assets. In this "information age," it's hard to believe that GAAP or the gadflies can't keep up with how capital is allocated and how cash flows still paint the picture of a healthy company here. At 15 times gold standard net income, the company will be quite interesting if it can effectively deal with the storm of trouble that is heading its way in the form of lingering investor doubt and class action lawyers who have filed lawsuits without lead plaintiffs."