The OCF over the past 2 years doesn't look great at first glance but in each year the main driver has been an increase in inventory contributing a $2m drag in FY15 and $1.5m in F14. In the case of Dick Smith, not a great thing. But in PGC's case there has been a corresponding increase in sales.
From FY12 to FY15 inventory turnover has been 5.8x, 4.8x and 4.8x. So no problem or blowout in the time it's taken to sell inventory.
So from the figures we've got to work with at present, the drag in OCF in my view is primarily due to the high rate of growth the business has experienced. But if there was a deterioration in the stock turnover going forward I'd get concerned.
PGC Price at posting:
63.5¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)