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It really isn't that much. Look at it this way... The way a corporate balance sheet works you don't spend money manufacturing your product. What you do is co
by TomOfTTB 15y ago
It really isn't that much. Look at it this way...
The way a corporate balance sheet works you don't spend money manufacturing your product. What you do is convert the asset from money to a physical product you can sell. But that asset is still on your books as being worth whatever you paid to manufacture it.
RIM claims to have "shipped" 13.2 Million smartphones in the last quarter (as opposed to "sold"). Assume their phones cost about as much as Apple's iPhone (Via iSuppli: $187 to build) and you have $2.46 billion worth of assets in the channel. And that's only smartphones. It doesn't count the playbook.
Keep in mind carriers can return shipped phones. So really RIM's $3 billion only serves to put them at even every quarter
So in the grand scheme of things it isn't that much.
- hvs 15y agoI understand that part of accounting, but I didn't think that it was listed as "cash" on the balance sheet.
- dirtyaura 15y agoInteresting. Are you saying that this inventory can still be listed under Cash & Equivalents (1,986M on 28/5/2011) on balance sheet? Or is it under Accounts Receivable (3,772M)? Does Total inventory (943M) then has phones that are not yet shipped? (Values are from latest Balance Sheet data http://www.google.com/finance?q=NASDAQ:RIMM&fstype=ii http://www.google.com/finance?q=NASDAQ:RIMM&fstype=ii ) I've recently started to learn to read financials more carefully, but all these nuances of corporate accounting can make it a fruitless effort.
- shaggyfrog 15y agoIf you check your link's "Balance Sheet" tab, you'll see inventory listed under Assets as "Total Inventory". It would most certainly not be listed as Cash & Equivalents.
- dirtyaura 15y agoYeah, I was curious because it doesn't sound likely that shipped-but-not-sold phones would be listed under Cash & Equivalents (which is ~ $2B). But if his math about value of shipped phones ($3B) is approximately correct, then it doesn't fit under Total Inventory (<$1B) either, so it must be under Receivables (~3-4B), right?
- shaggyfrog 15y agoNo. A receivable is money owed to the company (compare to accounts payable, money the company owes to someone else).
- ScottBurson 15y agoYou're assuming that the channel holds a full 90 days worth of inventory. I don't know much about these things, but in these days of just-in-time manufacturing, that seems implausible to me. How do you know it's not 30 days, or 15?