RE:RE:RE:RE:RE:Q2 FinancialsClipper2 wrote: Rather than use the average costs for 3 quarters let's
use Q4-20 which had the highest total costs of $36,231.000. ($38,803,000 with no foreign exchange gain)
I honestly can't see total costs being as high as
$46,660,306.
Where will the extra $7,857,306 costs come from?
Clipper,
A good and quick way to estimate the total costs of a company is to look at them in conjunction with revenues. In Q4-20 the total costs = 36,231,000 while the revenue = 42,254,000. In Q2-21 you estimate the revenue to be 53,387,000 (or an increase of ~11,000,000 over Q4-20) and you expect the total costs to stay unchanged? Surely we should also expect an increase in total costs as well. Instead of getting into a detailed / time-consuming estimation of the new total costs my back-of-the-envelope guesstimation is to get an average of the costs / revenue ratios over a few Qs. For example
Q3-20 revenue = 27,474,000 thus cost/revenue ratio = 24,122 / 27,474 = 87.7%
Q4-20 revenue = 42,254,000 thus cost/revenue ratio = 36,231 / 42,254 = 85.7%
Q1-21 revenue = 39,801,000 thus cost/revenue ratio = 35,354 / 39,801 = 88.8%
So an average cost/revenue ratio of around 87-88% (or ~$47M in total costs) would be reasonable. What does an average total-costs-to-revenue ratio of around 87.5% mean? It means that the Net Margin is around 12.5%. And a Net Margin of 12.5% would give us a Net Income of $6.7M (53,387,000 x 12.5%) which is reasonable imo. As we don’t have US debt anymore I don’t expect any FX Gain / Loss in Q2-21 therefore decide to add back an guesstimate $1M-$2M to Net Income (I could be wrong with regard to FX).
Q2-21 Back-of-the-envelope
Estimated Revenue = 53,387,000
Estimated Total Costs = 53,387,000 x 87.5% = ~46,700,000
Estimated Net Income = 53,387,000 - 46,700,000 = US$6,700,000
or around $8.2M without FX Loss.