@Saiton , will give it a go to try to provide a "simple" explanation! Upfront apologies if this ends up confusing you even more ... !

Cash on Hand/Bank and "Profit" are absolutely related, but are quite separate separate concepts.

Cash on Hand/Bank

• Is the amount of cash that a company has in its bank account, term deposits etc.
• Cash comes in when a company makes a sale and cash is collected (whether immediately, or say, 30 days later) or if there was a capital raise or issue of shares, or proceeds from a sale of a business, for which cash was received
• Cash goes out when a company has to pay its suppliers/creditors, acquire a a business, pay down debt etc
• The Cash Flow Statement in the Financial Statements shows (1) Cash In (2) Cash Out and (3) Remaining Cash on Hand at the end of the reporting period
• Note, in the above, there is no concept of "profit" or "loss", just cash coming into and out of the company's bank accounts from different sources

Accounting Profit or Loss

• This is how Accountants typically calculate the profitability of a company, at a super high-level:
• Revenue
• Less Cost of Good Sold or Direct Operating Expenses
• Gross Profit or Loss
• Less Operating Expenses (Indirect)
• Operating Profit or Loss Before Tax (PBT)
• Less Income Tax
• Net Profit or Loss After Tax (NPAT)
• Revenue is typically recognised at the time of sale, but physical cash for the sale may only be received later if the sale is on credit terms.
• Similarly expenses are recognised when incurred, but physical cash to pay for the expense may only go out of the business later, if the sale is on credit terms
• Lastly, in operating expenses there are NON-CASH expenses eg. Depreciation, Amortisation, Asset Impairments, Provision for Doubtful Debts etc - these can be big amounts
• The way Accounting profit is calculated is governed by mandatory IFRS Accounting standards

Because of the combination of (1) timing differences in when cash comes in and cash goes out from operations (2) there being non-cash expenses included in Operating expenses (3) there being cash coming in or going out that has nothing to do with Accounting profit eg, proceeds from a capital raise, sale of a business, acquisition of a business, NPAT and Cash Balances are almost, never the same.

So it is entirely possible that PPE has extra cash (from say, cash from prior years, efficient collection of receiveables, cash from a sale of a business, cash from a capital raise etc) which is used to pay down debts, while make an Accounting loss this FY, perhaps due to there being a lot of non-cash operating expenses which must be recorded in the books this financial year eg. Impairments, Depreciation, Amortisation etc.

Conversely, a business can also be making a lot of Accounting profits, but it can be cash poor if it say, cannot collect payment for its sale, it buys a business etc..The business may then need debt or a capital raise for it to be able to pay its obligations.

Companies often use a non-IFRS standard concept: Earnings Before Income Tax Depreciation Amortisation (EBITDA) to take out the impact of these, to provide a "more accurate" state of profitability .....

I'll stop here before I make this any more complex and invite more eggs being thrown!

The short answer @Saiton is that a number of costs in their accounts such as write-downs of assets are non-cash adjustments, so they affect the statutory bottom line - which in this case was a loss - but they don't affect their cash - because they are non-cash items. The best way to try to get your head around it is to look at their Appendix 4E which is the bare facts without any fancy spin:

In the table I've put the orange rectangle around above you can see that they had an EBITDA result in FY25 of $13.611m, a "Normalised EBITDA" of $33.264m and a "Normalised profit after tax" of $16.615m, yet they reported a statutory (bottom line) loss of $10.831m, which is due to everything below in the orange rectangle. However, before we dive into that, check out the red rectangle above - their NTA - which is NEGATIVE 37.79 cents per share, better than last year's NEGATIVE 52.16 cents per share, however it pays to note that this business still has a negative book value in terms of tangible assets. Basically they owe more than what they own. Red Flag!

Now, looking below at the Orange rectangle, they start with that Statutory Loss of $10.831m, then they back out Depreciation and Amortisation (non-cash items) and finance costs (real cash costs) and then they back out all of their "Normalisation adjustments" - which are anything they believe are one-off costs that don't reflect the ongoing costs of running the business - in their view - and those adjustments include Fair value movement in contingent consideration (I haven't looked into that in this particular case but it looks like a "mark to market" adjustment of assets) and Impairment of intangibles. Those two items together represent over $16m of non-cash adjustments. Impairment of intangibles usually means they are writing down the brand value or goodwill associated with prior year acquisitions, quite a common thing when companies pay too much for other businesses that they acquire or don't achieve the cost savings (synergies) that they expected to achieve from those acquisitions, so they (or their auditors) believe the carrying value of those assets on their books is too high and has to be adjusted down - so they book an impairment or adjustment which is just an accounting thing and has zero effect on their actual cash in the bank, but it does affect their statutory bottom line result.

So the real reason they were able to pay down some debt is that they were actually cashflow positive before those non-cash adjustments dragged their result into a loss.

Hope that helps.

I'd also check note 11, it reconciles net profit to operating cash and can give you a good picture of the difference. As well as impairments/write-offs there was a good improvement in debtor collections.

@jcmleng @Bear77 @rh8178 sharing the wisdom! This is Strawman at its best.

Ah yes I follow now. I have some idea of company financials having owned multiple businesses over the yrs. Just sometimes i get stumped. I knew there could be cash from other yrs in the bank to pay down the debt. I think I took it too litteral as the Pos Cash was from this yr. I now see yes it could be from this yr or others however the could have been write downs etc (or as you say, non-cash adjustments) pulling it into the red. I completely understand now. Now you say it, its absolutly obvious. Most of the time my brain just doesnt think long or deep enough to come up with it myself.

So until I train my brain to wake up on accounting practices, I may have many more questions to come. Thanks for your time. @Bear77

Thanks @jcmleng for the run down. I had my head around most of what you wrote pre my question, so good that I have that confirmation that I know something, HA HA. @Bear77 nailed this one for me. Thanks for your time composing your notes

Ill come back to this note later so I can get my head around it further to see if I can understand your points @rh8178. I looked through most of their report last night but its very daunting for a newbie. I think I had a brain fart about 3hrs into looking through it yesterday afternoon. Ill come back to it fresh. If I have questions Ill post here. Thanks

G'day @Saiton ,

You’ve received some great advice above, but I thought I’d take another crack at explaining in my way, only because looking at it from different angles might help the learning process.

Reading your question with the statement “Positive cash collections” my mind went straight to working capital. The easiest way to see this is to put a couple of numbers side by side.

Firstly let’s look at Operating Cashflow. We can see we collected $1.226Bn from Customers this FY.

However, when we look at the P&L… we only billed our customers $1.098Bn this year.

Some sneaky Bean Counter has collected a full $128 Million dollars more from our customers than we billed them this year. #Winning

If you think through the Invoicing and Collections processes, even in your personal life, there is a time delay between when you receive a bill (from say) Telstra and when you pay them. The day TLS invoices you, they recognise the Revenue but park the "Asset"* on the balance sheet as a Receivable (because you haven’t paid those thieving bastards yet, even though you promised to), maybe you then dispute your bill and refuse to pay them for a long time while you sort things out. That receivable can sit on the balance sheet as an "Asset" for a very long time, sometimes many years. Let’s say you finally pay TLS 3 years later. At that point there is no revenue to recognise (that happened 3 years ago) but there is free money coming in the door, hence “positive cash collections”.

Hope that helps.

JM

*I intentionally use Air Quotes to highlight that, from an Accountants point of view the Asset side of the balance sheet is the dangerous side! That probably sounds counter-intuitive most of the great bankruptcies of our time came from overinflating Asset values. Very rarely would a company account for their liabilities incorrectly.

I'll bet my left nut this is the issue with CTD.

Veering completely off piste, I just asked Chatty to make me list of Asset side Bankruptcies..

 Major Bankruptcies from the Asset Side

1. WorldCom (2002)

• Issue: Capitalized line costs as intangible assets rather than expensing them, inflating assets and profits.
• Impact: ~$11B accounting fraud, one of the largest in U.S. history.

1. Enron (2001)

• Issue: Used special purpose entities (SPEs) to hide debt and inflate the value of energy trading contracts (mark-to-market accounting).
• Impact: Assets were grossly overstated (many were effectively worthless), leading to collapse.

1. Lehman Brothers (2008)

• Issue: Overstated value of mortgage-backed securities and real estate assets, while using "Repo 105" transactions to hide leverage.
• Impact: When asset values collapsed, balance sheet solvency evaporated.

1. Washington Mutual (2008)

• Issue: Carried a huge book of subprime mortgages at inflated values.
• Impact: Assets written down rapidly in the financial crisis, triggering the biggest bank failure in U.S. history.

1. General Growth Properties (2009)

• Issue: Overstated commercial real estate valuations.
• Impact: Mall assets declined sharply in value during the GFC → bankruptcy.

1. Parmalat (2003)

• Issue: Fake cash and investment accounts in subsidiaries, including a $4B fictitious bank account.
• Impact: Assets on balance sheet were fabricated.

1. Valeant Pharmaceuticals (2015 collapse, never fully bankrupt)

• Issue: Aggressively capitalized intangible assets from acquisitions; relied on inflated goodwill and questionable accounting.
• Impact: Stock collapse (though not full bankruptcy).

1. Luckin Coffee (2020, China – restructuring not U.S. bankruptcy)

• Issue: Inflated revenue → overstated receivables and cash balances.
• Impact: Market cap collapsed, assets largely fictitious.

1. FTX (2022)

• Issue: Claimed billions in crypto "assets," but many were self-issued illiquid tokens (FTT).
• Impact: When market tested, assets were essentially worthless vs. obligations.

1. Evergrande (China, 2023 restructuring)

• Issue: Reported large property development assets, but many were stalled, unfinished, or unsellable at book values.
• Impact: Assets written down massively → insolvency.

There's some really good explanations here already but I thought I'd chip in because (1) it addresses a common misconception, (2) it makes some of other concepts make sense, such as what people really mean when they talk about triangulating the three main disclosures (P&L, Balance Sheet and Cashflow Statement) and (3) it gives me an excuse to not read another bloody Annual Report.

The next bit is a little dry but if you stick with it you may end up with an AHA moment.

So I won't speak for others but when I started out, I thought the way to do a cashflow statement is that some poor schmuck goes through the bank account and categorises every transaction. That's called the direct method. In practice I have NEVER seen that method used. Instead, companies use the indirect method. Under this approach every* General Ledger account, EXCEPT the Cash on hand/Bank** GL account(s), is mapped to a cashflow line. You then take movement of each GL account from the start of the period to the end of the period as a proxy for the cashflow movement. In reality the P&L always starts the year at zero so the end balance = the movement. That's not true of the Balance Sheet. A typical Balance Sheet account doesn't start at zero so the opening balance is relevant.

So, a simple worked example. You'll typically map Revenue GL accounts (P&L) and Trade Receivables on the (Balance Sheet) to the same cashflow line - let's call it Receipts from Customers. Lets say you recognised $1 million in Revenue and your Trade Receivables balance both started and ended the year at $100k - so nil movement. So assuming no other GL lines are coded to Receipts from Customers, the figure you will show at the end of the year is $1 million - all of which is coming from the Revenue line. How can that be right when we know some of that revenue is going to be a debtor at the end of the year i.e. not cash? It works because, given there was no movement in the receivables line the amount of revenue stuck in receivables at the end of the year exactly offsets with the amount of the amount of receivables we started the year with (prior year revenue) that we converted to cash during the year. That might take a little bit of thinking through but if you get that then it unlocks the next bit that is a little less dry (at least to me).

So I promised an AHA moment. Once you get the idea that the cashflow statement is entirely mechanical and is just a function of maths, it unlocks a couple of things for me. First, is the realisation that if there is a variance between what the P&L is saying and what the Cashflow Statement is saying, the answer MUST be in the Balance Sheet. It's just maths. Second, and related to the first point, when people talk about triangulating those three main disclosures, it's not an amorphous concept. They are directly and inextricably linked. And people think maths isn't fun...

*Why would you map GL accounts that don't involve cashflow movement to the cashflow statement? It's because you're also mapping the other side of the entry to the cashflow statement and on the same line so they net net to nil. So depreciation expense (P&L) and accumulated depreciation (Balance Sheet) get mapped to the same line on the cashflow statement and net to nil. Similarly for Share-based payment expense (P&L) and Share Capital (Balance Sheet), actually that one might be a manual adjustment but you get the idea.

**Why don't you map the Cash GL account to the cashflow statement? It's because it's the balancing figure. It's the number that pops out at the bottom of the cashflow statement. It's the check you've done the cashflow statement correctly. If the number at the bottom doesn't equal the Cash GL movement exactly you've stuffed up.

Welcome @McLovin

There's a thread here in which some software and subs are discussed.

Personally, I usually just download the financials from the ASX website. It can be a hassle inputing data manually, but you know it's correct.

I sometimes use CapIQ but you have to be careful that the data is accurate.

Hi @McLovin, for the companies I follow closely, I also put the numbers in manually from the ASX reports. Even though it takes a few minutes, it means I really digest the details of what’s going on across the P&L, Balance Sheet and Cash Flows. I’m data-driven and so for me it’s not wasted manual labour but valuable study!

For quick scanning I use both paid MarketScreener.com (because it shows evolution over time of analyst consensus average, min and max numbers) and free TradingView.com (I like the historical p/e charts). For companies I am screening as opposed to modelling, they’re provide good summary numbers, including valuation multiples. Of the two, I probably use MarketScreener.com 80% of the time.

I used to use Cap IQ but Tikr does 99% of what I want and the data isn't really of a quality that justifies the price of Cap IQ. I have to chop and change most data anyway so going directly to the source (company's own financial statements) is what happens. I can't imagine anyone really needing much more than what Tikr provides to get an overview. The reality is that the best opportunities require manual work. And I can't remember the last time I discovered something through using stock screeners etc. It's more important to build a big funnel of potential ideas through things like this forum and then learn how to sort the wheat from the chaff.

It feels like if ASIC or the ASX pulled their finger out and just required companies to lodge electronic versions out of SAP or whatever they use and then let people access the data through a database query and download it. Sadly, the ASX struggled to upgrade its website so I'm not holding out much hope.

I agree with some other posters that nothing beats the ASX announcements and manually transcribing figures from company announcements. It's definitely not wasted time in my view. I do use other platforms for different purposes but the only one I pay for is TIKR, chiefly for transcripts but it does all the metrics/consensus targets etc.

The one gap I have is none of the platforms I use show historical shares on issue (or else I'm having a 'boy look'). As someone who appreciates companies who go to lengths not to dilute, it's something I'd be keen to see. What do people use to track this?

I think your only chance is to track back through the annual reports - helpfully the equity note should show you what's been issued over this year and a comparative for prior year, so if you pick up each second year, you can get the info pretty quickly.

Good example below from Johns Lyng's 2023 annual report:

Tikr has SoI in the income statement.

Commsec shows UP TO NINE years of SoI (Shares on Issue) under the "Financials" tab for each company:

Only 6 years for JLG because that's how long they've been listed. Below is CSL, with 9 years of SoI and other data, and the graphs at the top (Earnings and RoE) go out to 10 years.

MarketScreener.Com shows SOI last 5 years,… but your view is 4 years at a time.

One of several finances screens shown below. SOI 3rd line from bottom.