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Author: TMFMmbop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 476  
Subject: Re: CFSG 3Q Date: 11/9/2010 10:28 AM
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Could you tell me what would make a company write-off receivables? Is it because the people owing cannot pay thus CFSG cannot collect?

Correct.

Because from my understanding, the people owing are sizeable and reasonably healthy iron and steel firms that might be struggling now but should still be able to pay (albeit slowly).

Well, timing matters too since CFSG could run into a cash crunch at some point and because if it's not clear when CFSG might get paid, GAAP still dictates they write that down even if the potential exists for it to come back. Worth remembering though is that we don't know who all of CFSG's customers. Some are definitely big iron & steel firms, others may be smaller ones on the verge of "consolidation." What that consolidation means for their obligations is an unknown to me.

Also remember that even the big guys like Wuhan, a noted CFSG customer, don't have the best balance sheets at present. Wuhan is sitting on $190mm of cash and $4.2b worth of debt. CFSG would be very low in the collection totem pole if it came to that.

Tim
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