This is an amendment to my post...I made a mistake on the current ratio and need to correct it. So, consider it corrected with this...
There is much that might not be clear about Elite that necessitates a closer look at the numbers and the past few years, to better assess the company and help understand the growth that has occurred, irrespective of the recent YOY reduction in revenues. So, let’s start by looking at the concerns about debt. That can be done with a simple liquidity ratio calculation – specifically a calculation of the current ratio.
A current ratio is a liquidity ratio that signifies the ability of a company to pay debts. A current ratio that is considered good is 1.0 or better, as it shows that after debts are paid a company still has assets left. So, the math is total assets/total liabilities = the current ratio. Again, 1.0 or better is the desired ratio.
For Elite, that math is as follows:
Current ratio for 2017 = 3.17
Current ratio for 2016 = 3.60
While the current ratio decreased YOY, the point is that it shows Elite has the ability to pay debts 3x, therefore, any argument suggesting bankruptcy lacks gravitas.
What other numbers impress for their improvement?
• Building, land values (less depreciation) increased about $1.1 million.
• Operating expenses are down 32% 2017 v. 2016
Now, let’s look at one more set of numbers and do some simple math to see how Elite has faired over a longer-term of 3 years.
The company has been derided for their 52% reduction of revenues YOY and, while disconcerting, it does not tell the longer-term picture. The real value of a company is determined over a term longer than a quarter or a year. Generally, an analysis of a company over 3 years provides a clearer picture as to its viability, longer-term growth and assessing its potential. So, let’s step back and look at 2014.
In 2014: Elite had revenues of $4,601,376 and total diluted shares of 526,880,118 (which are more than O/S, but less than A/S…THEY ARE SHARES ELITE IS RESPONSIBLE FOR PAYING OUT). The simple math is revenues divided by diluted shares. For 2014 the ratio of revenues per share is .0087. Are you with me so far?
Now let’s step into the last fiscal year – 2017.
In 2017: Elite had revenues of $9,637,715 and total diluted shares of 844,506,245. This is a clear increase of diluted shares of 317,626,127 or 60.3%. An increase that is of concern, but it does not tell the whole picture. One more simple math problem will provide a better perspective on the three-year improvement Elite has made to its business. That calculation is revenues divided by total diluted shares. For 2017 the ratio of revenues per share is .0114.
Now let’s compare 2017 to 2014 for a better growth picture. As noted, 2017 saw revenues per share of .0114, while in 2014 there was a .0087 ratio of revenues per share. So the math problem is .0114 (where Elite is) minus .0087 (where Elite was) = .0027 divided by .0087 = .31034 or a 31.034% INCREASE in revenues per share over a three-year period.
This puts to rest the misapprehension of facts. So, even in the face of a reduction in revenues 2017 v. 2016, Elite is not collapsing. In fact, as the numbers clearly show, Elite is a better company today than it was three years ago. The numbers, no matter how sliced, speak the truth and, when we add in the partnerships and the ADF portfolio potential, the business assessment is obvious…Elite is a business in position for even longer-term growth and success. PERIOD
AI
