The folks at the Motley Fool investor site posted an interesting examination of trends in accounts receivable (AR) and days sales outstanding (DSO) among major publicly traded wire and cable companies, looking at how General Cable's trends compare to competitors' and what AR and DSO may suggest about how a company is being managed.
"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.)"
The upshot is that potential investors need to dig further into the details of company financial statements, but that General Cable's recent rise in AR could signal missed revenue estimates in the next few quarters.