As a follow up, I just got PMed and it made perfect sense.
I will certainly post my findings, but for people who don't read filings on a regular basis, you can easily do a trend analysis by simply comparing last year to this year when looking at the financial statements. Of course, it won't be real meaningful because of the enormous growth, but still interesting to see just how much SPNG has grown.
Pay particular attention to the A/R on the balance sheet. Divide that number into overall sales. If that number is about 6, that's good. That is called Accounts Receivable Turnover ratio.
The reason 6 is good is because when divided into 360 (what accountants use as a fulll year # of days), the Days Sales Outstanding is 60. That is a good number. A number higher than that is nothing to be alarmed at, but we prefer the quicker turnaround in order to continue to build the company at a more rapid pace.
Don't forget that TV and internet sales do not hit A/R, as it is instantly converted to cash and re-invested into advertising, inventory, Dicon operations, etc.
So also don't be alarmed by the cash on the balance sheet. If it is low, it means they are re-investing for continued growth.
The Income Statement shows how earnings went for the year, and can give a fairly good idea what their margins are. I use two methods here. Divide earnings before taxes by total sales to get a %, and also after taxes. The reason before taxes is sometimes more telling is because earnings are, legally, reported differently to the IRS than to the SEC. They might use accelerated depreciation on assets for the IRS for a higher tax write-off, but straight-line for the Income Statement, to show higher earnings. It's done all the time with public companies. Straight-line is usually the accepted practice when reporting to the SEC.
Taxes can also be deferred from one year to the next to avoid what is usually 40% corporate taxes. However, earnings after taxes is what is used in calculating EPS (earnings per share).
The cash flow statement should be quite interesting as well. The operating activities portion shows what the cash inflow and outlay was during the year. It also considers working capital, which I won't go into detail here. Just look at the bottom of the operating activities and check that number. Don't forget, that will also include advertising and things of that nature, so don't freak if it isn't as high as you might like to see.
The next in line is Investing Activities, and possibly where we might see the money spent to acquire Dicon.
Financing activities shows what has occurred through the selling of stock, buying back and retiring of stock, and any debt activities.
You might be surprised how relatively easy it is to understand.
Underneath all the financial statements are the Notes for the Statements. It clearly spells out what each line item means and is comprised of.
Then...what everyone is waiting for...is Subsequent Events. This shows material events that have occurred since May 31. Remember, the financial statements are just a snapshot of how things existed at May 31. Subsequent Events typically will discuss earnings for the time since May 31, along with, USUALLY, an updated to any change in share structure.
Have fun, and feel free to PM me with any questions.
By the way, don't forget to read the introduction at the top. It will probably mention the Dicon acquisition there as well.
Enjoy doing what I am forced to do everyday!!!
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