Boardwalktech Software (CVE:BWLK) is in a strong position to grow your business
There is no question that there is money to be made from owning shares in unprofitable companies. For example, biotech and mineral exploration companies often lose money for years before they are successful with a new treatment or mineral discovery. However, unprofitable businesses are risky because they could potentially burn all your money and get into trouble.
should also Boardwalk Tech software (CVE:BWLK) will shareholders worry about their cash burn? In this article, we define cash burn as its (negative) annual free cash flow, which is the amount of money a company spends each year to fund its growth. First, we determine your cash flow by comparing your cash consumption with your cash reserves.
Check out our latest review of Boardwalktech software
When could Boardwalktech software run out of money?
You can calculate a company’s cash path by dividing the amount of cash it has by the rate at which it spends that cash. As of September 2022, Boardwalktech Software had $1.4 million in cash and no debt. Importantly, your cash burn over the last 12 months was $580,000. That means it had about 2.4 years of cash track record as of September 2022. That’s decent given that it gives the company a few years to build its business. The image below shows how your cash balance has changed over the past few years.
How well is Boardwalktech software growing?
Fortunately, Boardwalktech Software is moving in the right direction when it comes to cash burn, which is down 81% over the past year. And sales increased by 25% over the same period; also a good sign. It seems to be growing very well. Actually, this article only makes a brief study of the company’s growth data. This historical revenue and earnings chart shows how Boardwalktech Software has evolved its business over time.
Can Boardwalktech software easily raise more money?
There’s no doubt that Boardwalktech Software seems to be in a pretty good position when it comes to managing its cash burn, but even if it’s just hypothetical, it’s always worth asking how easy it is to make more money could raise financing for growth. Issuing new stock or borrowing are the most common ways for a public company to raise more money for its business. One of the main benefits of publicly traded companies is that they can sell stock to investors to raise cash and fund growth. By comparing a company’s annual cash burn to its total market cap, we can roughly estimate how many shares would need to be issued to keep the company going for another year (assuming the same burn rate).
Boardwalktech Software has a market cap of $26 million and has issued $580,000 over the past year, which is 2.2% of the company’s market value. That means it could easily issue some shares to fund further growth, and it might well be able to borrow cheaply.
So should we be worried about Boardwalktech Software’s cash burn?
As you may have noticed by now, we’re relatively happy with the way Boardwalktech Software burns your money. For example, we believe the reduction in cash burn indicates the company is on the right track. And even their sales growth was very encouraging. After considering the various metrics mentioned in this report, we feel quite comfortable with how the company is spending its money. On another note, Boardwalktech Software has 4 warning signs (and 1 which is potentially serious) that we think you should know about.
If you’d rather check out another company with better fundamentals, don’t miss this one. free List of interesting companies that have HIGH ROE and low debt or this list of stocks that are expected to grow.
The assessment is complex, but we help to simplify it.
Determine whether Boardwalk Tech software may be overrated or underrated by consulting our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Internal Transactions and Financial Health.
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This Simply Wall St article is of a general nature. We provide feedback based on historical data and analyst forecasts using only unbiased methods, and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Please note that our analysis may not include the latest announcements from price-sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.