Thanks for the detailed analysis and comments. Great 5 year trend charts, and they tell a sad story for sure.. ..thanks !
Have not had time to think through this properly yet..a busy weekend ...but my first instinctive feeling is as follows:
1) Agree the cash flow and trend sux ! Need to be turned around and quickly. We did have 1 cash flow +ve month...what happened after that, I can only guess..
2) Most the debt on the 2017 balance sheet was short term ( the 15 month term line of credit). I referred to the long term debt as (in my opinion ) relatively small. The term on that short term debt term has now passed so what happened with it ?...has AJX already paid it back with maybe some of the $10M from the last capital raising ?...sorry my memory is poor and I am time poor for research right now as well. The risk of short term debt is that it cannot be paid back through cash on hand or near term receipts and this level of risk is reflected by the Quick Ratio which is poor but not out of range.
3) The total debt / equity ratio is very poor, agreed ! Looking only at the long term debt / equity ratio though, it is around 6.6 which is bad but not a train wreck for a small company wanting to grow ( my opinion ). The $5M short term line of credit which makes up a big % of the debt was, in theory, to buy raw materials to supply increased demand. So the gearing was increased to fund growth, and for a small growing business this would seem normal to me. The big question is whether this sales growth occurred...seems not ..
Will be interesting to get to see the 2018 balance sheet when the next annual report comes out.
AJX Price at posting:
15.0¢ Sentiment: None Disclosure: Held
...but my first instinctive feeling is as follows:
