The Cash Conversion Cycle

Through the normal course of business, companies acquire inventory on credit, which they in turn use to create products. These products are then sold, oftentimes on credit. These actions generate accounts payable and accounts receivable, with no cash exchanged until the company collects accounts receivable and settles the accounts payable.
Measuring a company’s ability to efficiently convert resource inputs into cash flows and why this is important for investors.


Picking the Right Tax Pocket for Your Assets

One big advantage of a 401(k) plan is that it is tax-advantaged—it helps minimize the amount of money Uncle Sam can grab from your pockets in the form of taxes.
But the best way to limit Uncle Sam’s reach is to make sure you are putting the right assets in the right pocket. In this instance, the pockets are either taxable savings accounts or tax-deferred 401(k) accounts.
The decision as to which account—taxable or tax-deferred—will hold your stock assets and which will hold your fixed-income assets while attaining your desired asset allocation is often referred to as the “asset location” decision. If you are just starting out and have savings only in your 401(k) plan, the decision is relatively easy.
But sooner or later you will be saving in both taxable and tax-deferred accounts. In this situation, your first decision, as always, is your asset allocation decision—the percentage of your total savings that you invest in the various asset categories.


WATCH VIDEO ON HOW TO Isolating Data With Views

With over 2,000 data points per company, Stock Investor Pro offers a robust screening database. However, for analysis of individual companies, most users only focus on a select number of fields. While the various tabs on Stock Investor Pro allow you to view related data fields—growth rates, multiples, ratios, etc.—you can only do so for one company at a time. Our members frequently ask for an easy way to isolate specific data points that are critical to their personal investment research. With “views,” users can specify only those fields that interest them and view the data in a single table on the Stock Notebook. This issue of Stock Investor News walks you through the process of creating, applying, and editing views, as well as using them to generate reports and to export data.
A view is a collection of data points that can be applied to the “active set” of companies in the stock notebook to view on your computer screen. The companies encompassing the active set are those in the entire database when you first open the program. The active set can be the results of a screen, or you may open a saved portfolio and that will become your active set.



Rolling the Currency Dice: Investing in International Bond Funds

The search for yield and the weak U.S. dollar have prompted individual investors to set their sights abroad, and to consider investing in foreign bond mutual funds. International bond mutual funds, however, have their own unique set of risks. And these risks are magnified by the often rapid ebb and flow of international currency markets.
Yields may be higher in other countries and the dollar may be swooning, but a careful look at international bond mutual funds is in order before you let your money travel overseas.
The two primary risks of investing in foreign fixed-income securities are:
Credit Risk: The riskiness of the issuers of the individual securities in the portfolio, andCurrency Risk: The risk that the currency in which the securities are denominated will change in value relative to the U.S. dollar.
There is also a more subtle risk for individual investors: understanding the sometimes arcane portfolio holdings of these funds, which may include futures, options, repurchase agreements, loan participations and asset-backed debt such as collateralized mortgage obligations.
And in terms of holdings, it can be surprising to what degree some of these international bond funds are actually invested in U.S. securities—contrary to the purpose driving most individual investors to international bond mutual funds in the first place.