I’ll use Piotroski’s nine variables to get an overview of financial distress risk at March 2021.
2. Does the company produce positive cash flow from operations?
Caffyns generated £4.6m of operating cash flows before movements in working capital, thus a Piotroski point is gained.
3. Has return on assets improved?
A profit in 2021 following a loss in 2020 means an improvement. Third Piotroski point.
4. Is cash flow greater than profits?
Yes. Fourth point scored.
5. Has the ratio of long-term debt to average total assets during the year diminished?
For 2020: £11.8m/£94.7m = 12.46%
For 2021: £12.2m/£95.5m = 12.77%.
No Piotroski point.
6. Has the current ratio improved?
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Prof. Glen Arnold
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