Advanced: Analysing balance sheet trends

Should You Get Out of Colgate-Palmolive Before Next Quarter?” That’s the provocative question Seth Jayson asks in this article. An analyst and commenter for The Motley Fool.
However, his technique leaves IFO mathematically in the dust. Look at this:

“I often use accounts receivable and days sales outstanding to judge a company’s current health and future prospects.”

Frankly, that level of sophistication is way above our pay grade, but math-lovers reading this will enjoy the analysis, which can be applied to any company. He concludes that there is no clear picture in this particular case, but it’s a good exercise.
IFO agrees. There may be no clear picture here, but in other cases anomalies jump right out, as in our example a little while ago, when we compared stocks in our model portfolio. One company was off the charts, the rest were tagging along within a narrow range.
That’s the kind of thing we’re looking for, even though this comparing of accounts receivable trends and days sales outstanding may be a bit too arcane for amateurs like us.

Disclosure: IFO owns stock in CL


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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