that is what is spooking investors here. Maybe
that last split wasn't too bright. Some people,
especially institutionals investors smell bankrupty when
stocks head for the low teens with huge debt and
revolving structures. Inventories are key at this time of
year, and those aren't great either. They are opening a
huge store in my hometown, I can't wait to buy some
superfat clothes and help the stock myself.!
Maybe the auditors will catch this. I don't know.
Testing the revenue cutoff is basically a test to
determine when inventory is shipped, since that is when
revenue is recognized. I don't know if auditors
necessarily check the actual shipment date to the requested
requires testing the cuttoff of revenue to be
sure future sales aren't counted early. This is
exactly what you are describing. The auditors could
possibly be subject to legal liability if your preshipment
take is accurate. That's why I don't think your take
is likely even though I don't see anything in the
financials to dispute it.
Also, any change in
accounting methodology, which your preshipment scenario
would be, would need to be disclosed. If it is common
practice and they do it every quarter then there is really
I have no idea about the perks the
ZQK exec's get. My company is similar in size and we
have exec's renting lear jets and taking limo rides
everywhere. Its hard to know where the line is between
necessary image expenses and waste.
Since you are a "bean counter" you know that the
financials only post a summary or grouping of various
individual line items into one catagory. We don't know, for
example, how much McKnight and his "friends" spend each
year on first class travel, entertainment, etc. We
also don't know, for example, how much ZQK rips off
the Aikau Family with all of the Aikau promotional
When the financials are audited, I don't think that
the auditors look at the customer requested shipment
dates per se. They might review, in the sample pulled,
the purchase order by a customer to make sure it is
there, and the invoice for the merchandise ordered to
verify billing, then verify the actual shipment date to
properly book the income. They would not necessarily look
to verify the actual shipment date to the requested
shipment date...IMHO. I don't know, but I don't think GAAS
necessarily requires this step to be taken.
I know little about the industry other than what
I've learned trading ZQK and being a hardcore surfer
for about 15 years.
I am however a "bean
counter" and have a thorough understanding of financial
statements. After reviewing the latest financials I have to
admit that I cant refute your take about the
preshipments. I'm not saying that your take is right, just that
I didn't see anything to disprove it. And, thanks
to you, I am keeping my eyes open for the scenario
you describe. I am skeptical however because what you
describe would seem to be "misleading" financial statments
and that would be unlikely, but not unheard of, with
the scrutiny of independent auditors.
cash figure is a little disturbing but with the
capital expenditures going on it understandable. As long
as their line of credit is big enough there is
little risk to the creditors.
As for me selling
my position, I take a fresh look at my investments
everyday. A big run up before earnings would be tempting
but its hard to say what I'll do.
How I find this type of information is of no
importance to you. What is important to you is how this
information is verified. When I advised this board that ZQK
was pre-shipping inventory, I told them that this
would be verified by the financial statements when they
are posted. AND I WAS CORRECT...AGAIN. ZQK was in
effect, CHEATING. The street saw right through it, and
now the stock is suffering for it.
the financials. You will notice a couple of things
which just jump right out at you. First, the A/R
balance is "THROUGH THE ROOF". Second, the inventory
levels are only slightly higher than last year. This is
almost unheard of. There is relatively no cash, and an
increasing amount of short term debt.
There is also
a carry-over effect. The quarter ending Jan. 31 is
historically the slowest quarter for ZQK. As Darren Barker
pointed out in his DOWNGRADE, orders are down. Do you
know why? It's because the orders which were to have
been shipped for the Oct. Quarter, were ALREADY
SHIPPED. The income has already been booked in October, so
WE WILL NOT SEE ANY BLOW OUT EARNINGS when the
financials are posted in March. Remember, we need to see at
least .20/share for the stock to begin the climb back
to respectibility. There is no way ZQK will post
we will see what the future holds for ZQK stock.
I've been in and out several times and made money each
time. I've actually doubled a couple of times. So, even
if my current long postition went to zero I'd still
be ahead. Of course I don't expect anything less
than a double or I wouldn't have bought back in. In my
opinion there is little downside here because a buyout
would be inevitable if we got in the single digits
(like Eddie_Would is rooting for). Also, (I wouldn't
want to mislead anyone about the extent of my
optimism) I do not have a big position this time.
You seem like a fairly intelligent person. At
least you know the industry, and it appears to me that
you know how to read a simple financial statement.
Would you please explain to McKnight's Stooge #1 the
effect of ZQK's PRE-SHIPMENT if merchandise to meet
earnings. Thanks in advance.
Actually, I had hoped
that you would have sold when ZQK was at or above your
cost, but who knows, if history repeats itself, in
about 2 weeks, we should see another set of "hype"
posts that will lead to the anticipated earnings run.
I'm sure you'll be out at that time...LOL
Everyone, don't take it from me, take it from a
FORMER INVESTOR, here's what he said:
can't wish a stock up. Sales drive earnings and
earnings drive the stock price. It's really a simple
relationship. Most of you are really pissed because you didn't
bail out a long time ago. stop fighting here, it's not
going to fix your problem. Eddie use to piss me off
also but guess what....he was right. Don't you just
You may HATE my posts...but you've
got to LOVE my advice.