to $9.0 billion in 1999. While Paccar was investing its increased cash its accounts receivable account remained virtually flat, belying revenue growth. Accounts receivables increased less than 2 percent between 1996 and 1999, or from $561 million to $570 million. Inventory levels, rather than increasing as one might expect of a variable cost, in fact declined. In 1996, Paccar had $406 million in inventory, whereas in 1999, inventory levels had dropped to $385 million.Accounts payable increased, as one would expect as a result of increases in sales volume. Income taxes increased proportionately and other current liabilities edged upwards accordingly. Except for the fact that the current portion of Paccar’s long-term debt increased from $6.2 million in 1996 to $70 million in 1999, every liability account appears reasonable.Stockholders’ equity has seen a reasonable growth, due to increases in retained earnings. Except for the year 1996, where Paccar had 466 million shares outstanding, the period between 1997 and 1999 saw common stock levels being fairly constant at around 78 million shares. It would appear that Paccar released a healthy number of common shares, thereby increasing its capital surplus, or paid-in capital account. No doubt, Paccar was anticipating the need for additional cash, perhaps for a business acquisition or developing a new venture.From a cursory look at the balance sheet, we see that inventory management is of some concern. Perhaps, Paccar began utilizing Just-in-Time inventory management practices. That might explain the decline in inventory levels while truck sales in 1999 broke new volume records. On the other hand, Paccar recently sold its auto parts division. Nevertheless, inventory is an area that requires more careful scrutiny.For one thing, Paccar has two general business divisions: heavy truck manufacturing and vehicle financing and leasing. Although only a conjecture at this point...
