After doing a training on business processes for 4 days, I realized that the case study was most insightful. Factoring receivables opens up the same can of worms as CDO's. Lets look at the point of similarity, both of them essentially sell future cash flows at todays prices. Just as asset prices can be inflated or loans foreclosed, how can Accounts Receivable be manipulated?
1. Channel stuffing
2. Changing the credit terms
More ideas from readers?
The other important thing I gleaned from the training was keeping your vendor and customer files clean and excel pivot table definitely helps :>
24 comments:
Factoring receivables opens up the same can of worms as CDO's
How can they open the same can?
If the can has already been opened by CDOs, then won't the worms have all wriggled away ?
And if the fish are now aware of the bait and no longer bite, just like CDOs are now viewed with deep suspicion, then what's the point of opening this can?
Can't this can be left canned and not un-canned?
@ Horsey : But you havent accounted for time travel in your assumption.
It is possible to go back in time and then use accounts receivables to open the very same can of worms!
But then CDO's might have to open another can of worms... unless we talk of parallel universes :D :D
There are always fresh fish in the pond... Ask his Harodianess :P
@ Surya... Fooled by randomness is a good book indeed! :D
Kiran ... how can u take away from Horse his fundamental right to question assumptions... well it might be BULLSHIT but he does have his rights...
In the last census Horse was counted among Humans (obviously a mistake) and hence you can take away a right from him which was promised by the constitution of India
PS: gag Tolani!!
@KJ - The assumption you make is that the worms would have been in the can way back in time as well..
My assumption was that they were 'smart' worms.. who would've grown on a diet of the unread copy of "Fooled by Randomness" lying on my bookshelf.. So they wouldn't have been in the can!
Since you've invoked the time-space continuum conjecture, the conundrum is "Can you un-can an un-canned can of worms if you travel back in time?"
I totally agree about the fresh fish, though.. stale ones create a stink...
P.S:
TT Rocks
\m/ \m/
Aruna........agreed that Horsie has been given constitutional rights....but he shouldn't misuse them like RT......otherwise we might have to slap a gag order on him to prevent him from shouting 'BULLSHIT' :D
Horise.......U can go back in time to a point where the un-canned can was still canned and then un-can it.....that way u will have un-canned an uncanned can of worms
St Charles in US had windy weather .. temperatures ranged between 16 and 22 degrees.. :|
I think there is a fundamental flaw in interpretation here. CDOs are themselves can of worms, contrary to CDOs being entities that open a can of worms. CDO stands for "Can of Disgusting Organisms". Factoring receivables will, as appropriately demonstrated, open up a can of worms similar to the can that is CDO.
Receivables, as the author agrees will have to be treated as assets on a company's balance sheet. However, how can such receivables that are never expected to be received (as they are akin to CDOs) be treated as assets. This remains the baffling question that is fueling ravaging debates at economic forums around the world.
Are nachos made of wheat or corn?
Case of the Uncanned Can :D
Fridaus has understood the space time continuum well.... what you think is a Connundrum , isnt really a connundrum.
@ JJ : You cant question Horse Sense!!!
But since you already have... I am inclined to agree with you. So what you are saying is that what the receivables might open up are CDO's themselves! Interesting what that could do the economic theory of recent times! :P
What did one snowman say to the other?
Rupiah Bwezani Banda (born 13 February 1937) is the President of Zambia.
And as John Maynard Keynes said in the long run we are all dead ..so what is the point going back in time
The long run matters if you are a lambi race ka ghoda..
So there does exist a case for going back in time..
@ Aruna - the point might be that once dead, we might also give rise to an uncanned can of worms feasting on decaying possessions. this is again assuming that the possessions are again like CDOs which noone wants to touch.
SFS
@KJ, JJ ...
If Revievables will uncan CDOs .. who will uncan Revievables (besides Rajni-Can't) ?
@Aruna ... In Surya's own words... the argument you just put forward can at best be treated as "Indira Gandhi way of Reasoning"
John Maynard Keynes was long dead before Surya started Running.
Correction: The last line was
John Maynard Keynes was long dead before the Surya was born and the Horse started Running.
You are all falling prey to the conspiracy of the worms!
We are wasting our time talking about cans here while the worms wriggle their way back in time and foreclose all the cans :D
Pandora had been given a large jar and instructed by Zeus to keep it closed, but she had also been given the gift of curiosity, and ultimately opened it. When she opened it, all of the evils, ills, diseases, and burdensome labor that mankind had not known previously, escaped from the jar, although Pandora was quick enough to close it again and keep one value inside: hope. We are not told why hope alone remained in the jar
hence the CPM si saying ban CDO .. it is causing draught problems in Kerala
In the long run all comments will be deleted.
"Lets look at the point of similarity, both of them essentially sell future cash flows at todays prices."
Doesn't this hold true for all financial assets ;)
By the way, I'm not sure if a can of worms is something that can be "opened". As per wikipedia, "Can of Worms" is the local name of an intersection on the east side of Rochester NY, which by the way is a city with a most interesting history with nicknames as diverse as "The Flour City" and "The Flower City".
This makes me wonder why most cities and states in the US sport nicknames. Nonsensical nicknames at that. Chicago for instance bears the sobriquet 'The Big Onion'! Now this reminds me....Chicago is the hometown of the presidential hopeful Barack Obama.
We'll get to know on the morrow if Obama manages to win by as comfortable a margin as the one predicted by most opinion polls. I've never quite warmed up to the idea of relying on opinion/exit polls. These polls are based on the rather unreasonable assumption that the infinitesimally small sample and the humongously large population have a strikingly similar probability distribution. Not willing to buy that.
Infact, as Taleb has repeatedly pointed out, reliance on unreasonable assumptions is one of the main causes of the current financial "meltdown". Investors heedlessly assumed a normal distribution of returns for most of the complex securities, while in reality these CDOs have tails that are much fatter than the ones predicted by a standard bell curve.
get back to academics!!!
Game over..some of the comments which would normally not be connected due to the space time continuum are connected by dotted lines due to a worm which dug a hole through a tin can.
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