Daejan – financial distress risk

Share On Facebook

Piotroski factors provide some insight into the likelihood of financial distress by examining trends in key accounting metrics over two years.

If all nine are in a positive direction then a very low level of distress is indicated. Any score under five out of nine should make us wary.

The first factor is profits.

Daejan was profitable in the year to 31st March 2019 with £159m operating profit and £120m profit after tax (ignoring exceptional items).

In the six months to the end of September it made an operating loss of £8m after taking a £46m valuation hit on properties in NY. The loss after tax was £11m.

A Piotroski point is awarded for the annual accounts analysis but not for the half-yearly analysis.

Does it produce positive cash flow from operations?

Cash flows from operating activities in the year to end March was £62m. One Piotroski point scored.

In the half year to end September net cash generated from operations was £31m, so it gains a Piotroski point for the half-year analysis.

Has the return on capital employed figure improved?

Net income divided by beginning of year total assets in the year to 31st March 2019 was £120m/£2535m = 4.7%.

For 2018: £203m/£2,407m = 8.4%

There has been a deterioration on the annual analysis. There was also a deterioration on the six month analysis – going from profits to losses.

No Piotroski points.

Is cash flow greater than profit?

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20200217 12:54:51