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PHAZAR CORP Message Board

  • shaw2.kind shaw2.kind Oct 13, 2010 11:51 AM Flag

    Quality of Earning Is Not Good-Cashless Earning

    The key metric is 'cash flow from operations' and 'operating cash flow per share' because the cash flow statement reconciles both the income and balance sheet statements, it does not lie. Unfortunately, this company was unable to convert a single penny of this gigantic wow sales growth into cash. On a pershare basis, cash flow from operations was ZERO.

    Most Chinese companies suffer from this disease. Every time they report sales and earnings, the numbers are so spectacular one thinks how could it be so cheap, what a valuel until one examines the first part of the cash flow statement. Thus, extreme caution is warranted until cash flow from operations turn positive. Ideally, I would like to see at least .08 - .11 cents operating cash flow per share to be certain of the quality of earnings.

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    • ralph_call_me_dieter_brock ralph_call_me_dieter_brock Oct 13, 2010 6:33 PM Flag

      Hey Dude... sorry you weren't in and missed the move. Nice disection of the cash flow...who cares ? The key metric is this is a company that manufactures one of the hottest selling and most in demand products in the wireless the time they are spewing out cash on a quarterly basis and you feel comfortable enough to get in I'll be selling you my shares. See you at $10.

    • Cash flow from operations was only -19K vs -480K in the year ago quarter. This is a significant improvement and biz is recovering from CEO's statements. If these trends continue, cash flow from operations should go positive soon i would suspect. Good luck to all.

      • 1 Reply to chioudog
      • Sorry, the numbe is 19 K loss, meaning on a per share basis, it was ZERO to LOSS. As I said, one should expect for a solid .08 -.12 cents per share gain in 'operating cash flow per share', given the .11 cents EPS, not just improving. Because, cash flow from operations per share should dovetail earnings per share. Do you want to know why this ain't so? Look under the hood, you will see that the same receivables which presumably is correlated with sales growth and therefore EPS also show pretty good writeoffs along with inventory writeoffs.

        Look, it may not matter for a few days because most investors in speculative penny micrcaps look at the headline numbers. Many don't even know how to do accounting DD. But eventually, sooner rather than latter, it comes to bite them. Then, they complain on these boards, "why it is going down it just reported such great numbers. Dah.

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