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VisionChina Media Inc. Message Board

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  • peristentone peristentone May 3, 2009 6:57 PM Flag

    Lets back out the cash....

    I don't think P/E is the right metric to use on this company. Their accounts receivable is significantly increasing, so the operating cash flows are much more revealing about the financial performance. If you look at the operating cash flow divided by the enterprise value (backing out the net cash position of the company), you are only getting about a 10% operating cash flow yield against enterprise value. That's nothing remarkable at all.

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    • On the contrary my friend -- they have done a great job collecting ARs. Remember, they acquired 6 agencies in 2008 so it is normal that AR has increased relative to their increase of revenues due to the new businesses. Right? There is an incentive to collect ARs as the acquired companies will not get their earn-out payments. Again, a win-win.

      And AR has actually declined a little sequentially from 4q08 to 1q09. So when you say AR has increased significantly you are NOT clearly understanding or painting the picture properly, IMHO.

      • 1 Reply to alcheo
      • I think you are right about the A/R, but I still think looking at operating cash flows is much more revealing about the financial performance than looking at earnings. All of those "payouts" for the companies they bought can be moved around on the income statement anywhere they need them to go to make their numbers. But cash flows don't lie. With small Chinese companies I simply don't trust the accounting, and I like to watch cash.

 
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