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Johnson & Johnson Message Board

  • cunningoceanarrow cunningoceanarrow May 23, 2011 3:21 PM Flag

    JNJ to Fall Short Next Q?

    Will Johnson & Johnson Fall Short Next Quarter? The numbers don't paint a clear picture. For the last fully reported fiscal quarter, Johnson & Johnson's year-over-year revenue grew 3.5%, and its AR (accounts receivable) grew 8.4%. End-of-quarter DSO (Days Sales Outstanding) increased 4.8% over the prior-year quarter. It was up 7.5% versus the prior quarter. Is JNJ sending any potential warning signs? Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can also suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

    Why might an upstanding firm like Johnson & Johnson do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors

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