Interesting article on Yahoo Finance from Simply Wall St
finance.yahoo.com
As noted , Zen has an annual cash burn of 2.8 million! Cash runway 10 months from Sept 2020 and what affect will the new hires, space rentals, have on this ?
As investors, we really look at the revenue side of this Trebor venture closely. We can do " lets try to break even math" soon.
When Might ZEN Graphene Solutions Run Out Of Money?A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at September 2020, ZEN Graphene Solutions had cash of CA$2.2m and no debt. Importantly, its cash burn was CA$2.8m over the trailing twelve months. So it had a cash runway of approximately 10 months from September 2020. To be frank, this kind of short runway puts us on edge, as it indicates the company must reduce its cash burn significantly, or else raise cash imminently. The image below shows how its cash balance has been changing over the last few years.
debt-equity-history-analysis
How Is ZEN Graphene Solutions' Cash Burn Changing Over Time?Because ZEN Graphene Solutions isn't currently generating revenue, we consider it an early-stage business. So while we can't look to sales to understand growth, we can look at how the cash burn is changing to understand how expenditure is trending over time. Given the length of the cash runway, we'd interpret the 25% reduction in cash burn, in twelve months, as prudent if not necessary for capital preservation. ZEN Graphene Solutions makes us a little nervous due to its lack of substantial operating revenue. |
