RLG said in the March quarterly report that “recievables and inventory” at March 31st was $4.6m - 90% of which will convert to cash in the June quarter.
That’s telling us that $4.14m in cash receipts from sales is expected without considering any new cash inflows from sales coming in for the June quarter. Assuming even $2m in cash sales attributable to and booked in the June quarter then we’re at $6.14m cash inflows from sales.
Whats interesting is that if we presume that they’re making a margin of 30% on their inventory sales (and 30% is only an estimate i have made), then you can add together their cash outflows other than inventory and divide by that presumed margin on inventory to calculate the cash flow breakeven figure.
Therefore: total expenses - inventory for March qtr is $1.483M / 0.3 = $4.94m in cash sales to effectively breakeven.
The March quarterly also says that “RLG expects another record sales quarter in 4Q FY2021 and to be operationally cash flow positive in combination with continuing revenue growth”.
I feel as if its laid out for us how this could occur.
Happy for people to comment or critique.
All IMO
RLG Price at posting:
3.2¢ Sentiment: Buy Disclosure: Held
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