Page 23 - Demo samer flip book

Investopedia.com – the resource for investing and personal finance education.
3. Parse Organic Growth from Other Revenue Sources
The third thing investors can do is scrutinize the sources of revenues. This involves identifying and then parsing different sources of growth. The goal is to identify the sources of temporary growth and separate them from organic, sustainable growth.
Let's consider the two dimensions of revenue sources. The first dimension is cash versus accrual: we call this "cash" versus "maybe cash" (represented on the left side of the box below). "Maybe cash" refers to any booked revenue that is not collected as cash in the current period. The second dimension is sustainable versus temporary revenue (represented on the top row of the box below):
To illustrate the parsing of revenues, we will use the latest annual report from Office Depot (ticker: ODP), a global retail supplier of office products and services. For fiscal 2003, reported sales of $12.358 billion represented an 8.8% increase over the prior year.
First, we will parse the accrual (the "maybe cash") from the cash. We can do this by looking at the receivables. You will see that, from 2002 to 2003, receivables jumped
This tutorial can be found at: http://www.investopedia.com/university/financialstatements/ (Page 23 of 66)
Copyright © 2004, Investopedia.com - All rights reserved.