Every other company I have seen pretty much matches current AR with current AP. I see nothing different with SSM. If their AR is way ahead of AP, I would actually be screaming at them to get their collection department in order, rather than view it as a positive.
The accrued revenue on the balance sheet affects the profit and loss statement. It does not affect the cashflow statement.
I think you may be seeing way too much than necessary, and I suspect that comes from your preoccupation with GAAP accounting earnings.
And finally to answer your question. I would definitely prefer to see positive cashflow and profit, rather than reduced cashflow with reduced creditors. The latter means that the business has no leverage or is incompetent in their dealings with suppliers, getting worse payment terms with suppliers than they could with customers.
I am sorry, but I am really not convinced by your reasoning.
SSM Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
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