Let me ask a question re a statement. It comes from me thinking...

Let me ask a question re a statement. It comes from me thinking about a Euroz comment re free cash flow and enterprise value and mix of capital (market cap) and debt. The statement says as debt is paid down the market cap rises by the same amount (naturally, organically).

As of today (at 63.5 cents) market cap is $95 mill. And debt (less cash) is currently at $85 mill. So we have an Enterprise Value of $180 mill. Now Euroz calcs current free cash flow as 18%. Revenue for this 2020 FY will be $64 mill guidance.

So 18% free cash flow on $64 mil is $11.5 mil. So the 'debt' of $85 mill should be $73.5 mill in 12 months. (if no new debt added). Now if the EV remains at $180 mill there is no choice but for the market cap to increase by that $11.5 mill. So market cap should rise to $106.5 mill.

My question: is this so simple and obvious and clear? Does such a company as ZEN (stable cash flow and earnings), as debt decreases, the EV will stay the same, and hence the market cap will simply adjust up?

It was just a one liner in the Euroz analysis, but I am just thinking about it. If this 'logic' is so simple, and clear, it means we 'should' expect a growth in market cap (share price) - without ANYTHING happening. No new contracts. Just the status quo. Does that make sense? A market cap growth from $95 mill to $106.5 is a 12% growth. Will Mr Market grow our share price by 12% in the next year with us just paying down debt? Is this more (mathematical) evidence that no news (no bad news) is GOOD NEWS?