Credit balances are for customer that have paid in

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Credit balances are for customer that have paid in advance of a shipment or have overpaid, which the Company will apply to the next job or refund to the customer, based on customer preferences. Typical terms for customers are 2/15 net 30, but the Company experiences a DSO of approximately 60 days during the Historical Period due to larger customers taking longer to pay. Although these customers are taking longer to pay, the Company experiences limited collectability issues, as evidenced by the historically low bad debt write offs. Insights There is limited customer concentration in AR from year to year as the top 10 customers represent 26.9% or less of total AR at each Historical Balance Sheet date and due to the nature of the project based business. Large projects may take more than one year to finish, so a top 10 customer in one year may not be the next year since they have completed or are in process of completing a large project. Of this balance, $803 of this is related to one customer who paid in Sep-16. The 0-30 bucket increased as shipments increased in Aug-16 and have not been aged out yet. Historically, the Company experienced limited customer concentration in trade AR as it is a project based business
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© 2016 Grant Thornton LLP | Project Lightning | October 21, 2016 DRAFT 59 Monthly inventory levels are driven by early completion of direct jobs and the Company strategically purchasing raw materials to complement future bookings Balance sheet analysis Observations The table to the left presents inventory by type. The chart to the bottom left presents monthly inventory balances and DIO. The strategy for raw material purchasing focused on strategically purchasing raw material based on market price during 2014. The Company now enters into forward purchase contracts for billet to mitigate the risk of market fluctuations. Raw material consists of purchased parts (small parts, paint and glass) and raw billet, while WIP consists of material, labor and overhead. Labor and overhead are applied based on pounds of aluminum billet used. Because of project lags and delays for large projects, finished goods levels increased over the Historical Period. Inventory outside location consists of scrapped billet that is sent to Party 1 for rework and uninstalled inventory held at outsourcing partners. This account increased as the Company is storing finished inventory at an outsourced partner waiting to be finished and shipped to the customer. Inventory in transit consists of inventory moving from State 3 to the other Company's locations. See the inventory reserve discussion later in this report. Insights Overall, inventory increased in response to the growth of bookings and current backlog.
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  • Spring '08
  • McCaffrey
  • Revenue, Grant Thornton LLP

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