Unbiased financial chart thread!, page-7

"The company clearly stated in the last 4c page 4 that they forecast to spend $9.6 million in outflows this current quarter. I ask an unbiased question is this statement correct"

Hello Y

Your question appears to be a genuine attempt to understand how the cash flow analysis represented in the displayed chart is able to fit with the Company’s expected expenditure for the current quarter, and if so it is deserving of a response.

I must say that your apparent new found faith in the reliability of the Company’s predicted figure is comforting. I had gained the impression from your previous posts that you were rather sceptical about Management’s predictive abilities.

Accepting this as the likely expenditure for the quarter, you obviously see a contradiction between this figure and the possibility of cash flow neutrality being achieved once expenditure reaches $8.7M, a figure that would apply if cash flows in and out were to continue perfectly along their historical trends.

Accepting both figures to be correct, the answer to your question in fact is quite simple. The point of achieving CFN would be reached before the end of the current quarter. That is, the point where $8.7M of the total $9.6M had been expended.

As a theoretical example, $8.7M could be spent in the first 10 weeks to reach the CFN point. Over that period cash outflows will have been higher than receipts. For the last 2 weeks operations then can be cash flow positive. Since cash flows are negative for the majority of the period the 4C report would still show cash burn (nett outflow). Unless the Company advises otherwise, the first indication of this scenario having occurred would be a cash flow positive result in the June 4C report.

It is highly unlikely that these exact figures will apply, but they are the only ones that we have available to work with.

I hope you find that this explanation has suitably explained the concepts involved.

Cheers
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