Paracelsian Inc (PRLN) Message Board

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Biotech / Medical : Paracelsian Inc (PRLN)

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To: Richard Mazzarella who wrote (1733)	2/14/1997 7:51:00 PM
From: John H. Farro	of 4342

Richard, you wrote: "It's nice to see the projections. $2.8MM first year profit with 11.7MM shares gives $0.24/share. A P/E of 38 would yield a $9 stock." It's been a few years since I've taken an accounting course and I'm certainly no expert on this, but I think you are confusing cash flow with profits. They could generate the cash necessary to run the company for a while on warrant conversion, just as they could generate the cash by the sale of new stock. But this does not count toward the Profit in the P/E equation you used to give a $9/share estimate of the stocks value. I think the "P" should be the Net Income, or the Income minus the Expenses. If this is the case, the company may be just breaking even after a year. Having said that, I agree with you that this is just the beginning. Even if a $9 share price can't be justified by the P/E formula, it may be justified by anticipation of future profits two years down the line. Robin

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