How FC financing works for BIG, page-270

Continuing on from your post: "Yes there are 2,727 people looking at the burgers who Big considers to be customers. Big has received cash for these customers from FC, but those people are just looking at the burgers"

It takes 8 to 12 weeks from initial approach to customer sign-on. It takes nearly two months for BIG to go onsite and film, and a further three weeks for editing. So I'm not concerned with the numbers in the holding pattern because they take time to be processed.

Quote: "Is it conservative to count the cash loaned to you for people looking at your burgers?"

There are no loans to BIG - it's important to understand this. The amount is a payment in advance from the finance company based upon expected customer monthly payments. Once the customer signs on the finance company is responsible for the customer's ongoing payments and any bad debts. BIG gets a certain amount advanced immediately to help with production costs and the rest follows on over the twelve month period.

Where it gets a bit complicated is that the advance is given to BIG before the customer signs on, ie takes delivery of the video. So the finance company needs to get that advance back in the event that the customer refuses delivery, either by BIG paying a penalty (24%) or substituting another customer.

Quote: "The burger shop also pays much of it's costs with shares in the burger shop. So those costs don't show up on the cash flow statement."

No they don't. You'll have to look at the audited reports for this. IIRC the amounts of shares advanced as payment appear as a liability in the P&L, but happy to be corrected here.

Quote: "With that analogy how can you tell what are the real costs for the burger shop? How can you tell how much cash they are actually bringing in?"

I look at the cash going in and the cash going out over several periods - you can't fake that. BIG gets cash coming in from the customer via the finance company - cash in. BIG costs - to produce videos and (if applicable - none so far) any penalties - is cash flow out. BIG has been using this finance model for several years now, so we do have a baseline to extrapolate into the future. It's a guide.

Sorry to fisk you - I don't intend any disrespect. You are asking good questions and my take is just one opinion amongst many. I'm sure others can weigh in with their views.