_________________________________________________________________

                   I N V E S T I N G  B A S I C S
                     Wednesday, December 6, 2000

benjamin.rogers@enron.com
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ASK THE FOOL

This weekly e-mail offers answers to questions that perplex most
beginning and intermediate investors and throws in an
investing-related lesson, as well. Enjoy!

-- Q. What does it mean when a company is said to be "stuffing
the channel"? A company I was interested in has been accused of
this.

-- A. When a company stuffs the channel, it ships inventory
ahead of schedule, filling its distribution channels with more
product than is needed. Since companies often record sales as
soon as they ship products, channel stuffing can make it appear
that business is booming. In reality, the products not sold may
well be returned to the manufacturer. This means sales already
claimed may never occur. In a sense, sales from past quarters
are made at the expense of sales in future quarters.

See if accounts receivable growth is outpacing sales growth. If
so, that's a red flag. Alternatively, calculate "days sales
outstanding" (DSO). First, divide the last four quarters'
revenues by 365. Then divide accounts receivable by that number.
This reveals how many days' worth of sales the current accounts
receivable represents. Between 30 and 45 days is typical. You
can also follow the same process for the last quarter, dividing
last quarter's revenues by 91.25 (days in a quarter, on
average).

A company with a low DSO is getting its cash back quicker and,
ideally, putting it immediately to use, getting an edge on the
competition. Rising numbers can signify channel stuffing.
Remember this isn't useful for all companies. Restaurants and
cash-based businesses, for example, aren't going to have much,
if any, receivables.

-- Q. What's a holding company?

-- A. Holding companies own the securities of other firms. They
usually maintain voting control of these companies, as well. A
good example is Warren Buffett's Berkshire Hathaway, which owns
GEICO, See's candy and Dexter shoes.

Got some questions of your own for the Fool? Head to our Help
area or post your question on the Ask a Foolish Question
discussion board.
http://www.fool.com/m.asp?i=231022
http://www.fool.com/m.asp?i=231023

_________________________________________________________________


INVESTING BASICS - ONLINE ATTRACTIONS

We're probably preaching to the choir here. Odds are you're a
somewhat seasoned computer user. Even so, though, you might do a
friend a favor by printing out the following article and
offering it to an offline friend, along with a little discussion
about why you find the Internet so darn useful.

Online. There's no place like it. Each day, more and more people
are using the Internet to find information, jobs, homes and
apartments, and friends. You've heard us sing of the way that
cyberspace is revolutionizing investing. It's got a lot to offer
you in many other arenas, as well.

Take shopping. You probably already know that you can buy books
and music online, at sites such as amazon.com and half.com. But
you can also head to wal-mart.com and buy an outdoor grill
without leaving your house. Visit 1800flowers.com and choose a
bouquet of flowers to be sent to your sweetie from the comfort
of your desk at work. Find items you collect, such as comic
books or antiques, on sale at auction sites like ebay.com. Apply
for and get a mortgage for your new home at eloan.com.
Amazon: http://www.lnksrv.com/m.asp?i=231024
Half: http://www.lnksrv.com/m.asp?i=231025
Wal-Mart: http://www.lnksrv.com/m.asp?i=231026
1800flowers: http://www.lnksrv.com/m.asp?i=231027
Ebay: http://www.lnksrv.com/m.asp?i=231028
Eloan: http://www.lnksrv.com/m.asp?i=231029

If you're interested in health and medicine, visit medscape.com
or thriveonline.com. Medical news and advice awaits you. Want
recipes? Visit epicurious.com and you'll soon be whipping up an
asparagus omelet or a country beet salad. Investigating travel
options? Check out travel.yahoo.com or travelocity.com. You can
scan for the flights you want and make reservations, get weather
forecasts and driving directions.
Medscape: http://www.lnksrv.com/m.asp?i=231030
Thriveonline: http://www.lnksrv.com/m.asp?i=231031
Epicurious: http://www.lnksrv.com/m.asp?i=231032
Yahoo: http://www.lnksrv.com/m.asp?i=231033
Travelocity: http://www.lnksrv.com/m.asp?i=231034

And of course, there's investing. Thanks to the Internet, you're
only a few clicks away from information that used to require a
lot of time and money to get. Many sites, such as fool.com and
marketguide.com, offer much data and information -- for free. At
the Fool, for example, you can scour our message boards for
opinions on companies, read through our news and portfolio
reports, and set up and track your portfolio's progress. Visit
excite.transium.com and you can read articles from a company's
industry trade journals.
Fool: http://www.fool.com/m.asp?i=231035
Marketguide: http://www.lnksrv.com/m.asp?i=231036
Excite: http://www.lnksrv.com/m.asp?i=231037

The Internet has much to offer just about anyone, from kids
(agirllikeu.com and nick.com) to seniors (thirdage.com and
aarp.com). Besides Web sites, there's e-mail, which allows you
to communicate instantly and inexpensively with friends around
the world. You owe it to yourself to explore cyberspace at least
a little. If you don't have a computer, ask a friend with one to
give you an online tour. Many public libraries offer computer
access, as well.
Agirllikeu: http://www.lnksrv.com/m.asp?i=231038
Nick: http://www.lnksrv.com/m.asp?i=231039
Thirdage: http://www.lnksrv.com/m.asp?i=231040
AARP: http://www.lnksrv.com/m.asp?i=231041
_________________________________________________________________

IN THE SPOTLIGHT

-- Did you know that the Fool has a weekly newspaper feature.
Click on that link to read some sample content and see a list of
papers carrying us. If we're not in your paper, consider giving
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-- Have you strolled through the aisles of FoolMart lately?
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Plus some fun items, too. We're continually adding offerings, so
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-- If you're thinking of buying a car, reading our articles on
car buying might save you several thousand dollars - it's done
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_________________________________________________________________

A NOTE FROM THE AUTHOR(

I hope you're finding this product useful. The content
originally appeared as part of our nationally syndicated
newspaper feature (which I also prepare). Consider giving your
local editor a jingle and suggesting that they think about
carrying the Fool.
http://www.fool.com/m.asp?i=231045

Selena Maranjian
http://www.fool.com/m.asp?i=231046
_________________________________________________________________

My Portfolio: http://www.fool.com/m.asp?i=231047
My Discussion Boards: http://www.fool.com/m.asp?i=231048
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Fool.com Home: http://www.fool.com/m.asp?i=231050
My E-Mail Settings: http://www.fool.com/m.asp?i=231051


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(c) Copyright 2000, The Motley Fool. All rights reserved. This
material is for personal use only. Republication and
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