#FinanceDiscussion #CashflowAnalysis #InvestingInsights
Hey everyone! 👋 I came across this interesting post about a company that has negative cash flow but a positive price/free cash flow ratio. 🤔 How does that even work? It seems like a bit of a financial puzzle, doesn’t it?
Here are a few possible reasons behind this intriguing situation:
– The company might be reinvesting a significant portion of its cash flow back into the business for growth and expansion.
– It could be a reflection of the company’s capital structure, including debt obligations and interest payments.
– Perhaps the market is valuing the company’s future cash flow potential more optimistically than its current cash flow situation.
What do you think? Any insights or theories to share? Let’s dive into this topic together and learn from each other’s perspectives! 💡💬
Link: [https://preview.redd.it/lslic6o2y8dd1.png?width=451&format=png&auto=webp&s=8569245dad5592d4f3292e30378857eb1442afae]
AS ALWAYS THANKS!
Accrual method
Let’s say you start with $100. You purchase 20 coffees for $5 each. You sell those coffees for $8 each, but only half of the people give you cash, and half will pay you back later.
You spent $100, and received $80 in cash, so you have a net cash movement of -$20.
But your revenue would be $160, so you made $60 profit.
Your assets would be $80 in cash and $80 in customer iou – totaling $160.
Hope that helps
net profit of $8.88m vs revenue of $4.17m? nice. How’d they get those accruals through their auditors in the prior year? (how else could you make this kind of profit?
Revenue is vanity
Profit is sanity
Cash is King