RE: RE: RE: RE: RE: RE: RE: Account receivables ar At this time I am interested in a long tax loss trade. My comments on this BB is not going to depress the share price. The price will be depressed from the forced sale this is planned in the next few days when the stock is deleted from the index. It is an important index some share would have been sold & some more will come in the market. I will be buying the share from the institutions that have to sell.
I am in the process of making an exit plan. Should I sell all at the next bounce. Sell in stages & hold the profit in shares if I make any. How much loss I should take if the trade does not pan out do I buy more a lower price. Is it worth to monitor & trade this stock in future.
Last night I glanced thought the balance sheet & MD & A report for about 10 minutes. What stood out was that AR were grossly mismanaged & the dividend is not sustainable. Lot of stuff has been priced in. The company has an issue with decline in revenues. It could be seasonal. That is another debate. For me to hold this sock for a longer time the balance sheet has to be fixed.
There is a serious problem worth the balance sheet. First stock can have a dividend yield of over 33%. Company cannot afford it. They earned 10 cent a share for three months they are paying 9 cent per month x 12 = $1.08 for the year this is not sustainable. Dividend has to be cut till they fix the balance sheet. If you do not expect a cut in dividend then you are living in a different world.
Dividend has to be cut & can be total history the market expects that. They would be a few inexperience hoping for & holding this stock for that reason only.
The main problem for the company in addition to revenue is AR. I would say that is a major major issues.The market does not like it & that is why the stock is where it is. Insitutional investors know how to read balance sheet. I do not know the details & back ground. Based on my experience this has been grossly mismanaged. There has to be more right offs.
For this stock to get back to previous glory the company has to fix the balance sheet first. They have to bring down the AR pay off the debt. I don't know the person who was managing the AR is still there. The company was either too aggressive to the point of recklessness or lacked the necessary expertise to manage the AR. You need a new person there. You cannot keep that person in that position who has created this mess. Market has to know that this problem is fixed.
There are lot of ways to effectively manage AR. What has happened is done the shareholders have paid a big price for it now compamny has to deal with that in the best possible way to get shareholder confidence back. Take the losses & clean up & move on. Make sure you do not make that same mistake again. It looks very bad that you have a huge AR you write off big amount & then you carry a debt & then you pay massive dividend yield of over 33 %.
Discounting account receables has a cost so does the debt. If the AR is good then cost could be same. So if the cost is same then why not reduce the AR & Debt at the same time. If you think that you are not going to get paid for a service then do not offer that service because their is a cost attached to it & will end up as loss.