April '17

For the Business of Apparel Decorating

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2 0 1 7 A P R I L P R I N T W E A R || 15 In effect, high inventories and accounts receivable are not the assets they may appear to be. They are, in fact, bona fide liabilities to the cash flow within a business. CAN A LIABILITY BE DESIRABLE? Conversely, if a company buys materials, negotiates excellent terms with its suppliers, and takes full advantage of paying its bills on the last possible day without incurring late fees, wouldn't that make a substantial amount of accounts payable a good thing? You bet it would. Who, typically, has the authority and expertise to negotiate those credit terms? Why, management, of course. Please note that I do not condone any business to interpret "Net 30 days" to mean "We'll pay when we get the second notice." Ruin- ing a company's credit rating with habitually late payments negates the value of measuring and monitoring flow ratios in the first place. What I am a proponent of is celebrating those businesses that have earned the privilege of negotiating extended terms with vendors, timely payment from customers, and managing inventory effectively. TRENDS MEAN MORE THAN SNAPSHOTS The activewear company depicted on the previous page has a flow ratio of 2.41. Is that good? The standard for flow ratio—when look- ing at the metric for investment potential—is 1.25 or less. There are some companies that are very aggressive in the way they manage cash flow—for example, not too long ago, Microsoft touted a record low-flow ratio of 0.35—and are revered for doing so because their products are in such high demand and their accounting and opera- tions practices are very tightly managed. See the full lineup at To create fashionable apparel, sportswear, and décor, you have to make bold and beautiful statements. With Roland's dye-sublimation printers and new Fluorescent Texart ink options, you are not limited to standard colors and can choose from 375 bold fluorescent colors and beautiful pastel shades in the Roland DG Fluorescent Color Library. Texart RT-640 Dye-Sublimation Printer Texart XT-640 High-Volume Dye-Sublimation Printer Your Future is Bright.

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