There was a comment from Dean that touched on an interesting area of analysis. Working Capital.

Is the company a selling machine as flippe-floppe asserts, or is it rather, simply a fad common stock, that has caught the imagination of the market currently?

The financial statements, from a Working Capital analysis, suggest a fad stock, and potentially a fad gadget. The company, over a five year period has had a woeful record in actually getting paid. Their collections ratio has been 0.82. As a bare minimum, a company should show about 0.96. The last ratio was 0.95. Now this is a tremendous one off improvement, and would in isolation, be construed as a positive.

Receivables have however accelerated past Revenues, suggesting that the company is exercising a lax credit policy to customers, and if, past collections fall back to historical levels, a real problem will become apparent.

Second, Inventory levels have accelerated even faster than Receivables. We have an inventory glut. When inventory builds to excessive levels [increased supply] unless demand is growing faster, which it isn’t, then prices have to drop to sell-off the excess inventory, very often resulting in losses and reduced margins.

As a very significant portion of Revenue is based on selling common stock, and not actually selling product, losses on inventory will have a very leveraged effect on Net Income, as, Investors sour on the common stock.

Is this the future?

As if Starbucks didn’t have enough on its hands with that whole “Slutbucks” debacle.

Apparently, a new trend in coffee shops in the Pacific Northwest is beginning to spread like…well, let’s just keep it classy and say “wildfire.”

And though one of these bikini-barista joints, Cowgirls Espresso, only boasts 14 locations in Washington state so far, it’s hard to miss the fact that there’s a pretty ambitious-looking map of the entire continental U.S. on the Cowgirl Espresso locater on the Web site.

Other coffee shops, needless to say, are less than pleased.

“If you like nipples and third-degree burns, go for it,” says barista Sara Barnfather. “But it’s not my cup of tea.”

“I’m not turning my place into a strip club because business is down,” says R & R Espresso owner Ruth Oliver. “I’d rather close down.”

On the other hand, those who’ve switched over to the T & A theme say they’ve seen business triple, and that it’s swiftly becoming a matter of either playing by the new rules of the game or simply cashing out.

“We saw our male clientele dwindle to next to nothing,” sexy-espresso convert John Ferguson says. “It’s an ‘If-you-can’t-beat-’em,-join-’em’ kind of thing.”