Where’s Joe, page-45

Hi Fish, I have not had a chance to read the 'cash conversion article' but in any case its an easy issue to talk about. I have copied the CTD measure of Operating Cash Conversion from the 2019 annual report below. The key word is operating.
"The operating cash conversion rate, which is net operating cashflows excluding interest, finance costs and income tax paid divided by EBITDA is approximately 113%. As at 30 June 2019, borrowings totalled $39.3 million, representing a debt to equity ratio of approximately 7%. "
This has been another major flaw in the VGI analysis. They clearly do not understand the concept and use it to infer that CTD has cash problems and seem to promote it as some sort of solvency measure. Purely and simply operating cash flow conversion is a measure of how efficient the business is in converting its operating cash to EBITDA. Again it needs to be viewed as a trend and not a once off as accruals/payment timing issues distort individual periods. CTD have never inferred it is used for any other purpose and the trend actually highlights how efficient CTD really is. My simple table a couple of posts ago shows this and the relationship between key concepts. I have said over and over if you want to measure solvency look at the liquidity ratios and debt. VGI are plainly wrong trying to use the CTD measure of operating cash conversion to infer cash flow or solvency issues in isolation. There is more to it.
CTD is clearly very solvent.
I notice you have not provided comments on the measure. I would be interested to read your comments.
In note TC in the article are very careful not to allege any material misstatement. They raise mainly interesting historical issues that apparently CTD have responded to. The key word is historical. The best response CTD has given has been very good report(s) number - 2018 and 2019 have been excellent. Performance in any pursuit is always the best response.
The TC article is not of a nature that lends itself to typical basic accounting analysis.
Generally, the newish standard AASB15 applies to every business in every industry so its not unique to CTD at all. It simply allows you to recognise revenue when the goods or service transfers to the customer. It was introduced in response to evolving business models and is definitely not to be feared. There is some estimation required. Its definitely no big deal. The auditors made revenue recognition a key area of focus for this report.
Here is note 29 for CTD revenue recognition in the 2019 report.
"AASB 15 Revenue from Contracts with Customers – Impact of adoption The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018, which resulted in changes in accounting policies and adjustments to the note disclosure. There has been no material impact on the Group’s results for the year ended 30 June 2019. In accordance with transition provisions, the Group has restated comparatives for the year ended 30 June 2018 for note disclosures (note 10). A new accounting policy for revenue has been disclosed within note - 2 Revenue. In line with AASB 15 disclosure requirements, revenue has been presented at a disaggregated level within note 2 - Revenue and the total contract asset balance has also been disclosed separately within note 10 – Trade and other receivables. "
After reading the TC article and considering others I have read I guess the AFR journalists role is just writing down what they are told or read. Their job description must not include checking and digging. That's fine. In the end you get paid for what's in the job description.