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Jammin Java Corp. Message Board

  • j4c8l j4c8l May 30, 2013 4:18 PM Flag

    Sales and Receivables - what do they indicate?

     

    Q2 Sales: $559K Receivables: $386K
    Q3 Sales: $536K Receivables: $387K
    Q4 Sales: $411K Receivables: $416K
    Sales declined 26.5% while receivables increased 7.7%.
    Sales and Receivables should increase and decrease together.
    As Thorton O'Glove stated in his investment classic, Quality of Earnings (required reading in my MBA classes) the number one sign that a company is in distress is when receivables climb much faster than sales. It indicates that the seller has had to (1) loosen credit to intice buyers, shipping before buyers require replenishing and repeat sales are not happening.

    This topic is deleted.
 
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