It depends on how the company recognizes revenue. Many companies recognize revenue at the point of sale as Joe pointed out, though some recognize it at delivery and some when cash changes hands. What’s beautiful (in my opinion) about Joe’s book is that he makes you think about these things, unlike almost every other investment book I’ve read. (It’s like a “Security Analysis for Dummies” book.) I don’t think Joe once said, “Buy low PE stocks.”

I paused when I read the capital expenditures part too. For future editions, Joe may want to clarify for us analytical types. As he seems to really know his stuff, I assumed that he wasn’t talking about painting a machine or recaulking a seal but about upgrading or otherwise extending the life of machines and equipment. Without a background in accounting, someone may not come to the same conclusion as I did.

I think that BPal and I may have looked at the text a little to critically, but Joe could have clarified a bit as well. I wouldn’t say he got the accounting “wrong” so much as I’d say that the accounting is a little basic for CPAs. Still a must read for everyone in my opinion, and I learned a lot even with my background in accounting.

Also, the next section covers expenses and talks about $10,000 in repairs to equipment that get capitalized on the balance sheet and amortized. This also isn’t exactly correct. The accounting rules would not allow repairs to be capitalized. They are expensed as incurred. Only new purchases, construction costs (if the equipment is built in house), or items added to existing machinery that improves its value can be capitalized, not repairs. I think you were trying to highlight maintenance capex versus growth capex, but you got some of the exact accounting wrong.

I am very interested in getting my hands on this report, but I see that the link directs to your book. However, in your book I do not see any mention of FCF vs OE. I wanted to know how I could go about purchasing the report now.

Thanks.

Below is a link to an article on SeekingAlpha.com which I think will be of interest to FWallStreet readers.

http://seekingalpha.com/a...

Stephen

When I purchased it, Joe sent me the report within 48 hrs of purchase. If you have purchased it and haven’t received it, i wouldn’t worry, it probably means that Joe hasn’t gotten around to checking his e-mail, he seems to be a busy guy.

Enjoy the read, it’s great to have around.

IT’S WORTH THE 20 BONES! (This is a very fair price for what you get)

Cheers.

Just wondering if you were thinking about lowering the price on the report at all.