100% agree. Just listening to the episode now. There is a lot of rubbish spouted on these shows - you really do have to exercise the grey matter to pick through it.

It would be a brave discretionary consumer CEO that gave guidance with rising interest rates and all the fixed term rates rolling over to variable. But that’s not the same as saying the sector is a sell.

Dics. Hold SUL and ADH in RL; ADH on SM

You pay up front. I purchased once. Saw a lovely office armchair for $2000 on 8 week delivery. Just about to buy. Then glanced around and saw an even nicer (more comfortable) on floor stock, discounted 50% to $950. Paid. Delivered to my office next day. Sweet.

Disc: Never held but on watch list.

Just to be clear if you pay for something with cash, that doesn't automatically count as revenue. I'm too lazy to get the exact wording from the accounting standard but effectively control of the asset needs to move from the seller to the buyer. In the case of Nick Scali's business model that is significant because they usually take an order before shipping it.

So what does that mean for Nick Scali? It means orders made not delivered are a significant as a future predictor of revenue. The initial entry is DR Cash CR Deferred revenue (on the Balance Sheet). It's not taken off the balance sheet until control gets transferred. The exact point at which control gets transferred is often a point of contention companies have with their auditors but in my experience it's never before the goods land in the country.

One thing to watch is Deferred Revenue (Cash taken, order not delivered) and it's a knock I have on the NCK result because it is so significantly down. Timing plays a role so I wouldn't wholly lean on it but it's worthy of consideration.

[Not held]

That concept is coming back from when I last learnt this 2 years ago in one of my accounting subjects. Basically the cash advance/deposit is like a liability for Nick Scali. So it can only be counted as revenue once the good is delivered to the customer and then the cash is added back to the balance sheet

Every dog has its day, and then every day has its dog! What is rare is when both dogs are the same! Today I’m left scratching my head and wondering if I’ve learned anything about investing over the past 40 years! ;)

Also have to remember about companies selling gift vouchers.

Gift vouchers also count as unearned or deferred revenue, even if someone pays for them in cash.

I haven't seen any for Nick Scali but most likely they would exist.

And I believe one company got in trouble for booking vouchers as revenue. Can't remember who.

Another fun fact: Postage stamps is also deferred or unearned revenue. The large amount of deferred revenue from Auspost stamps is possibly one of the reasons why Auspost is underperforming financially at the moment as we don't know the full number of stamps minted. Even more disturbing is the number of collectors buying up sheets of postage stamps in the 80s and 90s not knowing about how much was actually printed and their children and relatives suddenly realising how hard it is to offload the collection.