cashflow

Yesterday I started a thread stating wait for the bottom. Well after examining BNB cashflow statement yesterday afternoon I would have no intention of buying BNB anytime in the near future, even if the price may bounce around.In 2006 & 2007 BNB were able to report profits but the situation is not as rosey when we look at their cashflow statements. If we look at their cashflow from fees received & payments to vendors & employees it is clear the business was barely cashflow positive, but the situation is a lot worse when we deduct net interest payments & income tax paid. In both 2006 & 2007 BNB generated a net cashflow deficit from operating activities. In fact the 2007 result was over 6 times worse than in 2006. So although this business has been expanding rapidly it hasn't generated positive cashflow from its operating activities. BNB has used proceeds from borrowings to basically fund its expansion & improve its cash position on its balance sheet. Many would say there are similiarities between MQG & BNB & that MQB will be the next to experience selling pressure, well I am not going to make any forecast on that possiblity, but I can say MQG last year did generate a cashflow surplus from operating activities unlike BNB. The AFR front page story on BNB refers to replacing the chairmen of 2 of its listed power & infrastructure funds to boost investor confidence. Perhaps a better place to start might be to explain to the market how it is capable of generating a cashflow surplus from its operations going forward.
Whilst directors might blame every man & his dog for selling their stock its eventually comes back to how good a business you really are operating over the longer period.
Regards
Buffett
PS No investment advice given on BNB, please do your own research