Is this Seasonality, or is this…?

Suppose I were to tell you that there is a business that generated $100 million in cash from operating activities (“CFFO”) in 39 weeks of its fiscal year, and burned $100 million in Q4?


(1) CFFO(Q1 + Q2 + Q3) = $100 million

(2) CFFO(Q4) = -$100 million


(3) CFFO(Full Fiscal Year) = A BIG FAT ZERO

Does this make any sense?

What if I were to tell you the following additional facts:

(1) Q1 - Q3 numbers are unaudited

(2) Q4′s numbers are never released separately (so you therefore one must solve for Q4 by using the full year figures, which are audited, less the 39 week’s figure, which are not audited).

(3) The problem described above worsened the last 2 fiscal year’s, even as the business experienced revenue and earnings growth in Q4

(4) The problem began 6 years ago, when the company started getting acquisitive and desperate for external equity and debt capital. Prior to 6 years ago, the company did not experience such strange quarterly dynamics, and discrepancies between CFFO and earnings in Q4.

More on this later, but would appreciate any/all questions and thoughts at this point in time.

(written from a spa center)

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Connecting to %s


Get every new post delivered to your Inbox.

Join 4,003 other followers