Patrick, you seem just a little confused about the subject under discussion when you say:-
"Cashflow negative does not equal a negative sales growth. It is not correct to equate cashflow statements with sales growth."
and:- "The difference is that between retail and wholesale, sales to a distributor (say Japan) would return less than those sold direct (eg Cellestis GmbH). Plus a sale made in one month may not be fully executed for some time"
I'll try to keep this as simple as possible. As Prime said Malta was talking gross (trading) profit whereas he should have been using net profit. Simply put gross profit is sales revenue less direct production expenses. Net profit is then after all the dangly bits are deducted from the gross profit. Your references above have nothing to do with this discussion.
Assuming 1 million units are sold per annum and allowing A$20 per unit (this allows a mix of retail and wholesale selling) gives us A$20million revenue. A gross profit margin of 50% gives us a gross profit of A$10 million. To calculate the net profit we now have to take off all other expenses such as salaries, marketing, etc which are running at the rate of A$8million to A$10 million per annum.
Thus on $20million of revenue the bottom line is pretty close to square, 0c earnings per share. A doubling of sales revenue to A$40 million (2 million tests) in say 12 months time, allowing the other parameters stay much the same, gives us about A$10million of profit or 10.4cps for a PE of about 35 as at 31/12/08.
CST Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
