morning all, from the other thread replying to jsbuser "I find...

morning all,

from the other thread replying to jsbuser

"I find all this will they be cash flow positive or negative this quarter a bit nebulous. Its clear the momentum will deliver this, and soon, so why is everyone hanging on what hour of the day its going to occur (about 2.17PM next Thursday by my reckoning)? This company is being built to last for many years, not hours."


I agree ---------

cash flow positive is a big deal - but, is also a very silly thing to hang one's hat on.


Lets say we have a quarter where we end up with more cash in the cookie jar than we had last end of quarter -

wow - that means we are cash flow positive -

and, low and behold - if we haven't raised any money from option conversion nor any other direct non business related method of putting money in the tin - then, it REALLY means we are cash flow positive.

Then - low and behold - we get a great big fat order - bam -------- and, we have to run around buying truckloads of chemicals to fulfil that order ---------- and, we have to pay the bill in 30 days - which we do -------- but, we have to hit the bank facility to do it -

and, we produce the goods - get the invoice out for the mother of all orders - and, the cash from that isn't in before the end of the new period -

Bang -------- back into cash negative ------------ even though everyone is doing cartwheels at a massive order and new contract -

in short ----------- things are champers and cigars - but, the old cash flow positive trick is out the window for yet another quarter.

Exactly why I have issues with 4C's and what they actually say beyond the surface numbers.

The real situation shows only twice a year -- half report and full report - AND, even they can trick you - because if say - you got a massive order in the door on 29 June -- it just would not show on the cash side - NOR would it show on the revenue side - because nothing has been produced - in fact it could even show on the liability side if Bob has brought a trainload of chemical as soon as he saw the order come in - because he snagged a special on lastminutechemistry.com -- and placed the order for it, got it delivered by very large drone with an invoice on the box - which lobs it on the liability side of the balance sheet.


As we have said before - all of these numbers don't tell us a thing - unless we know what is behind them - but, they do tell a story - it's just that it's a general story without any context.


have a great day all

Pinto