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Our Subscribers Say...
"There are numerous credit periodicals available to the credit professional today. How good is Credit Today? Is it relevant? I always have to read it late, or online because my credit analysts want to read it the minute it comes in. When my staff wants to read a publication before I have a chance to read it then something is working in that publication. We have cancelled our other subscriptions. When you have the best you do not need the rest."
Ron Woods
Corporate Credit Manager-World Wide
Thales Navigation, Inc.
"The newsletter, coupled with the website and the ListServ, are to us, more valuable than any other credit publication, bar none. I try to use at least one article out of each newsletter for departmental training/discussion sessions."
D. Mark Constantine
Corporate Credit Mgr
Fulton Paper Company
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Kimberly-Clark Customer Financial Services
"As a corporate credit manager with over two decades of experience, I consider Credit Today to be one of the best credit newsletters. Whether it is because of Credit Today's management, its distinguished panel of advisors, or the caliber of Credit Today's subscribers, it would be fair to say that some of the best and brightest minds in our profession are represented. The credit issues, technologies, news, credit department profiles, etc. are interesting and useful. Credit Today is a valuable reference and communications tool which I look forward to reading each month."
Paul Brunner
Corporate Credit Manager
Mitsubishi Electric Automation, Inc. |
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Financial Analysis Today
Sound credit management requires you to be proactive and there's no better tool for that purpose than the art and science of financial analysis. So here's your library of tools and resources relating to financial analysis in the credit field. Find plain English views and advice from the leading experts - both inside and outside the field.
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Principles of Calculating Bad Debt Reserves
By Dean Kaplan
A recent survey conducted by CFO magazine showed that when auditors challenge financial statements, two thirds of the time it is a reserve balance that is being questioned. In today's environment of increased focus on financial statements, auditors are reviewing bad debt expenses and receivables reserves more closely than ever. And in these difficult economic times, there has been a substantial increase in the number of companies having difficulty paying bills on time or at all. . . . keep reading
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Lessons from a Master on Recognizing Questionable Accounting Practices
Do You Have a Customer on the Way to Being the Next Enron? Will You Be Able to Spot Them in Time to Save Your Company Money? We recently had the opportunity to sit in on a talk for securities analysts by accounting professor-turned top Wall Street advisor-Dr. Howard Schilit. "This is a great time for accountants," said Schilit, who describes himself as financial statement pathologist. In today's post-Enron climate, he said, "We are treated like rock stars!" . . . keep reading
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Tips For Getting Financial Data From a Reluctant Customer: What to Ask; How to Ask
Credit Today's ListServ is always a source of great ideas. One recent exchange of valuable insights came when Anita S. Fleming, Manager, Credit at Degussa Goldschmidt Chemical Corporation asked group the following question: When a privately held customer refuses to share financial statements, but will agree to share selected information, what are the best questions to ask to get a good picture of the company's financial condition? Your input will be much appreciated. "I would concentrate on 'cash flow,'" Don Cowan, credit canager, Henrietta Building Supplies, advised. "Try to find out more about their receivables and payables. Are receivables adequate to cover payables? Are receivables/payables increasing or decreasing? This will then give you an indicator of sales, liquidity, and their ability to pay you going forward. Good luck. It's hard getting information from private companies." . . . keep reading
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The Lambda Index: A Better Measure of Liquidity Risk
Dr. Charles L. Gahala, CCE
In 1984, a finance professor at the University of Oklahoma by the name of Gary Emery devised a tool that can be used to gauge a firm's liquidity. Emery designed a liquidity risk measure specifically for credit managers. The tool was characterized by using the Greek letter ë, which is pronounced "Lambda." The name Lambda could have been called "touchdown" or "home run," so try not to let the Greek symbol get in the way of appreciating a valuable tool. Lambda was probably the Greek letter selected due to its phonetic relationship to liquidity. . . . keep reading
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Evaluating Public Companies in Two Minutes
By Dean Kaplan
The stress has been mounting for days as the quarter is coming to an end and published revenue targets have not been achieved. Suddenly the VP of sales calls an impromptu meeting. They've got a new customer ready to place a huge order that day that will make up the sales shortfall. Senior management needs to know if this is for real and if this customer is credit worthy. You've got five minutes to show up at the meeting. . . . keep reading
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The Decision Is Yours: Double or Nothing?
Editor's Note: You can test your credit decision prowess by reviewing the following real life scenario and then turning to page 12 to see how your chosen actions measure up to Credit Today's recommendations. It has taken three years to develop, but your firm is about to introduce a new product line that will substantially increase revenue. Much of this business will come from new accounts, but a few of your distributors are also expected to increase their ordering. For one distributor in particular, this new product line is a perfect fit, and marketing would like to see them double their purchasing . . . keep reading
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Rising Inventories = Potential Red Flag
As a credit analyst, one of the most important indicators you can track is the ratio of inventory to sales. It's used by money manager David Berman, who is fast gaining a reputation as a guru in the retailing sector. Berman originally cut his teeth as a CPA, where he learned that inventory accounting was a way managers could manipulate earnings. In a recent issue of Barron's, Berman points out that companies can let inventories rise over time and thus avoid the markdowns and hits to profits that they should be taking. "At times like these," he told Barron's, "gross margins get inflated, earnings accelerate, but cash flow is often negative as inventories build." . . . keep reading
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Analyzing the Statement of Cash Flows
By George A. Schnupp, CCE
The Statement of Cash Flows (Cash Flow Statement) is frequently one of the most misunderstood financial statement. To fully utilize this statement as a tool for assessing credit worthiness, you need to understand how to analyze those activities that drive Total Operating Performance (T.O.P.). A comprehensive analysis of the Statement of Cash Flows will guide you to a better interpretation of the financial data. . . . keep reading
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