Reposr, Yahoo,:Margins
IshDad
Mba50, two important things that have changed since last year. First, shares outstanding jumped by 23%, from 6.83 million to 8.43 million.
Second, overall cash flow was negative last quarter despite the fact that the company raised $1.1 million from the sale of common stock. As for operating activities alone, cashflow was negative to the tune of $4.9 million. In comparison, cash on hand at the end of the second quarter was $2.5 million. Negative cash flow is a reason for concern and investors should check out the next 10-Q to see how the company is managing its cash flow.
Also, gross profit margins are down, not up. According to the most recent 10-Q, the cost of goods sold, as a percentage of total sales, was 91.5 percent in the first half of fiscal 1998, compared to 90.7% in fiscal 1997. The company "this increase is the result of the markup experienced by Capital being lower than the markup associated with the Company's international tradeoperations. As revenues from the TAD program increase as a percentage of overall revenues, the
Company's overall profit margins will decrease." I point this out so that people won't panic after the next earnings report comes out and
a short points out that margins have fallen.
And lest I sound like a pessimist, net margins have gone up. The company's net operating income expressed as a percentage of gross revenues increased from 4.8% in the first quarter of fiscal
1998 to 5.2% at the end of the first half of fiscal 1998.
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