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I N V E S T I N G B A S I C S Wednesday, December 6, 2000 benjamin.rogers@enron.com _________________________________________________________________ Sponsored By: NDB A Special Offer for Motley Fool Members! Open an account with National Discount Brokers / ndb.com and get up to $300 in Free Trade Commissions.* Click Here to Apply Now! http://www.lnksrv.com/m.asp?i=3D231021 ASK THE FOOL This weekly e-mail offers answers to questions that perplex most beginning and intermediate investors and throws in an investing-related lesson, as well. Enjoy! -- Q. What does it mean when a company is said to be "stuffing the channel"? A company I was interested in has been accused of this. -- A. When a company stuffs the channel, it ships inventory ahead of schedule, filling its distribution channels with more product than is needed. Since companies often record sales as soon as they ship products, channel stuffing can make it appear that business is booming. In reality, the products not sold may well be returned to the manufacturer. This means sales already claimed may never occur. In a sense, sales from past quarters are made at the expense of sales in future quarters. See if accounts receivable growth is outpacing sales growth. If so, that's a red flag. Alternatively, calculate "days sales outstanding" (DSO). First, divide the last four quarters' revenues by 365. Then divide accounts receivable by that number. This reveals how many days' worth of sales the current accounts receivable represents. Between 30 and 45 days is typical. You can also follow the same process for the last quarter, dividing last quarter's revenues by 91.25 (days in a quarter, on average). A company with a low DSO is getting its cash back quicker and, ideally, putting it immediately to use, getting an edge on the competition. Rising numbers can signify channel stuffing. Remember this isn't useful for all companies. Restaurants and cash-based businesses, for example, aren't going to have much, if any, receivables. -- Q. What's a holding company? -- A. Holding companies own the securities of other firms. They usually maintain voting control of these companies, as well. A good example is Warren Buffett's Berkshire Hathaway, which owns GEICO, See's candy and Dexter shoes. Got some questions of your own for the Fool? Head to our Help area or post your question on the Ask a Foolish Question discussion board. http://www.fool.com/m.asp?i=3D231022 http://www.fool.com/m.asp?i=3D231023 _________________________________________________________________ INVESTING BASICS - ONLINE ATTRACTIONS We're probably preaching to the choir here. Odds are you're a somewhat seasoned computer user. Even so, though, you might do a friend a favor by printing out the following article and offering it to an offline friend, along with a little discussion about why you find the Internet so darn useful. Online. There's no place like it. Each day, more and more people are using the Internet to find information, jobs, homes and apartments, and friends. You've heard us sing of the way that cyberspace is revolutionizing investing. It's got a lot to offer you in many other arenas, as well. Take shopping. You probably already know that you can buy books and music online, at sites such as amazon.com and half.com. But you can also head to wal-mart.com and buy an outdoor grill without leaving your house. Visit 1800flowers.com and choose a bouquet of flowers to be sent to your sweetie from the comfort of your desk at work. Find items you collect, such as comic books or antiques, on sale at auction sites like ebay.com. Apply for and get a mortgage for your new home at eloan.com. Amazon: http://www.lnksrv.com/m.asp?i=3D231024 Half: http://www.lnksrv.com/m.asp?i=3D231025 Wal-Mart: http://www.lnksrv.com/m.asp?i=3D231026 1800flowers: http://www.lnksrv.com/m.asp?i=3D231027 Ebay: http://www.lnksrv.com/m.asp?i=3D231028 Eloan: http://www.lnksrv.com/m.asp?i=3D231029 If you're interested in health and medicine, visit medscape.com or thriveonline.com. Medical news and advice awaits you. Want recipes? Visit epicurious.com and you'll soon be whipping up an asparagus omelet or a country beet salad. Investigating travel options? Check out travel.yahoo.com or travelocity.com. You can scan for the flights you want and make reservations, get weather forecasts and driving directions. Medscape: http://www.lnksrv.com/m.asp?i=3D231030 Thriveonline: http://www.lnksrv.com/m.asp?i=3D231031 Epicurious: http://www.lnksrv.com/m.asp?i=3D231032 Yahoo: http://www.lnksrv.com/m.asp?i=3D231033 Travelocity: http://www.lnksrv.com/m.asp?i=3D231034 And of course, there's investing. Thanks to the Internet, you're only a few clicks away from information that used to require a lot of time and money to get. Many sites, such as fool.com and marketguide.com, offer much data and information -- for free. At the Fool, for example, you can scour our message boards for opinions on companies, read through our news and portfolio reports, and set up and track your portfolio's progress. Visit excite.transium.com and you can read articles from a company's industry trade journals. Fool: http://www.fool.com/m.asp?i=3D231035 Marketguide: http://www.lnksrv.com/m.asp?i=3D231036 Excite: http://www.lnksrv.com/m.asp?i=3D231037 The Internet has much to offer just about anyone, from kids (agirllikeu.com and nick.com) to seniors (thirdage.com and aarp.com). Besides Web sites, there's e-mail, which allows you to communicate instantly and inexpensively with friends around the world. You owe it to yourself to explore cyberspace at least a little. If you don't have a computer, ask a friend with one to give you an online tour. Many public libraries offer computer access, as well. Agirllikeu: http://www.lnksrv.com/m.asp?i=3D231038 Nick: http://www.lnksrv.com/m.asp?i=3D231039 Thirdage: http://www.lnksrv.com/m.asp?i=3D231040 AARP: http://www.lnksrv.com/m.asp?i=3D231041 _________________________________________________________________ IN THE SPOTLIGHT -- Did you know that the Fool has a weekly newspaper feature. Click on that link to read some sample content and see a list of papers carrying us. If we're not in your paper, consider giving the editor a jingle and requesting some Fool content. (Thanks!) http://www.fool.com/m.asp?i=3D231042 -- Have you strolled through the aisles of FoolMart lately? We've got all kinds of products -- subscriptions, tools, books, seminars and more -- ideal for beginning to advanced investors. Plus some fun items, too. We're continually adding offerings, so drop by now and then: http://www.lnksrv.com/m.asp?i=3D231043 -- If you're thinking of buying a car, reading our articles on car buying might save you several thousand dollars - it's done so for many others. http://www.fool.com/m.asp?i=3D231044 _________________________________________________________________ A NOTE FROM THE AUTHOR=01( I hope you're finding this product useful. The content originally appeared as part of our nationally syndicated newspaper feature (which I also prepare). Consider giving your local editor a jingle and suggesting that they think about carrying the Fool. http://www.fool.com/m.asp?i=3D231045 Selena Maranjian http://www.fool.com/m.asp?i=3D231046 _________________________________________________________________ My Portfolio: http://www.fool.com/m.asp?i=3D231047 My Discussion Boards: http://www.fool.com/m.asp?i=3D231048 My Fool: http://www.fool.com/m.asp?i=3D231049 Fool.com Home: http://www.fool.com/m.asp?i=3D231050 My E-Mail Settings: http://www.fool.com/m.asp?i=3D231051 Sponsored By: NDB A Special Offer for Motley Fool Members! Open an account with National Discount Brokers / ndb.com and get up to $300 in Free Trade Commissions.* Click Here to Apply Now! http://www.lnksrv.com/m.asp?i=3D231052 ARE YOU ENROLLED IN WIRELESS 201? Don't miss the sequel to the best-selling report on Soapbox.com http://www.lnksrv.com/m.asp?i=3D231053 FREE BOOK FOR FOOLS ONLY! Investor's Business Daily will send you a free copy of 24 Essential Lessons for Investment Success when you sign up for a free trial subscription of their newspaper. http://www.lnksrv.com/m.asp?i=3D231054 BECOME A FOOL! Get a FREE Investing Guide and more... http://www.fool.com/m.asp?i=3D231055 FOOL DIRECT E-MAIL SERVICES Need to change your address or unsubscribe? You can also temporarily suspend mail delivery. Click here: http://www.fool.com/community/freemail/freemaillogin.asp?email=3Dbenjamin.r= ogers @enron.com Have ideas about how we can improve the Fool Direct or new e-mail products you'd like to see? Try our discussion board: http://www.fool.com/m.asp?i=3D231056 ____________________________________________________ © Copyright 2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. MsgId:=20 msg-21350-2000-12-06_12-58-24-467046_5_Plain_MessageAddress.msg-13:10:00(12= -06 -2000) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: benjamin.rogers@enron.com
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