@Roy2U
I made somewhat of an error in respect of that Point 2 of my post, and how I calculate the additional working capital might warrant some clarification.
Essentially, in order to generate $21m of additional Operating Cash Flow will require additional Revenue of X.
In order to derive this X figure, I crudely took, as a proxy, the portion of Revenue that reported to OCF historically and grossed up your $21m in order to get that figure.
And then I simply applied the historical average Working Cap-to-Sales ratio (which has been around 4%...initially I used 6%, which was calculated incorrectly by me) in order to calculate the working capital investment required.
So, here are the workings:
(Note that I used the 2015 year to derive the theoretical extra Revenue, when OCF-to-Revenue was the highest ratio, meaning that the additional Revenue - and therefore the required Working Cap - are minimised)
FY2015 Revenue = $2.9bn
FY2015 OCF = $210m
=> 7.3 cents of OCF per dollar of Revenue
Therefore $21m of additional OCF would require 21.0 divided by 0.073 = $286m
Now additional working capital required = 0.04 x $286m = $11m
So, it isn't quite the $17m I initially calculated, but it means that the $42m deficit I originally derived is closer to $35m.
But the conclusion remains unchanged:
The Company is Under-Funded.
(To pre-empt the probable response from someone: No, not "insolvent" under-funded, i.e., not under-funded in being unable to
service its debt, but under-funded in being unable to
reduce its debt.)