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No. of Recommendations: 1
In the spirit of examining the cash conversion cycle, I took a look at CDW Computer Centers (CDWC). I have found them to be a wonderful supplier, as I order from them at least weekly in my job. Based on my positive experiences, I thought they might be worth a look as an investment.

Running the numbers, here is their cash conversion cycle for the past four years.

CDW-2001 CDW-2000 CDW-1999 CDW-1998
Days Inventories Outstanding
CoGS 3,434.51 3,352.61 2,237.70 1,513.31
CoGS per day 9.41 9.19 6.13 4.15
Inventories 119.12 110.20 126.22 64.39
DIO 12.66 12.00 20.59 15.53

Days Sales Outstanding
Revenues 3961.55 3842.45 2561.24 1733.49
Revenues per day 10.85 10.53 7.02 4.75
Receivables 318.41 337.42 230.19 152.31
DSO 29.34 32.05 32.80 32.07

Days Payables Outstanding
CoGS 3434.51 3352.61 2237.70 1513.31
CoGS per day 9.41 9.19 6.13 4.15
Accounts Payable 106.81 56.08 65.66 41.36
DPO 11.35 6.11 10.71 9.98

CCC 30.65 37.94 42.68 37.62

They have been steadily reducing the CCC over the past three years, and it is down to a nice 30 day cycle. The stock price climbed from 28 to 60 between last September and this March, but has recently dropped back down to 42. CDW has been growing quite nicely and making a good niche for itself in supplying computers and accessories overnight. As IT spending picks up, I think CDWC could go up considerably.

I'd love to hear what others think!

Potemkin
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