large volume trade - what happened?, page-13

Tapdancer... I fully agree with all that you have said. Especially regarding

- management integrity
- growth potential
- growth curve.

I just wish I had a date / target year when this business would become self sustaining.

As I said in an earlier post on this thread... betting against an energised sales / workforce is a very difficult thing, because they are just going to keep increasing revenue.

Im actually thinking that I am missing something in the way I see this business operating.

These are my assumptions:
I havent calculated these at all accurately I am just trying to get a feel where the cash flows fall and see if there is a funding gap at any point in time... to see whether these contracts ever lead to a negative cashflow situation...

I assume that they some downpayment - maybe 20%... so for a say 10k contract.... they generate $2k cash upfront

Then they purchase the equipment using their lines of credit at say 8% interest... so perhaps $800 per annum paid out.

Rental at (im guessing) 15% interest rate = $1500 interest income
Capital repayment over say 5 years rental term = (10000-2000) / = 1600 per annum

Net cash inflow

year 1 2000+2900 - 800 = 4100
year 2 2900 - 800 = 2100
year 3 2900 - 800 = 2100
year 4 2900 - 800 = 2100
year 5 2900 - 800 = 2100

Depreciation of equipment at maybe 20% per annum = 2k per annum - not accounted for.

I can see this business has potential - well not even future potential. I can see that it is performing well. I just want to know when it will wean itself of from external funding.

One other negative is that there was a comment on slide 11 of the FY13 presentation:
"Asset repatriation capacity issues to be alleviated by the opening of the Melbourne warehouse"

To me this means that there is underutilised assets on their balance sheet... being able to know the WDV of these assets would be useful.