Endologix's Cash Flow Patterns Raise Concerns Among Investors
Endologix Inc., founded by John R. McDermott, has raised concerns among investors due to its cash app flow patterns. A closer look reveals that a significant portion of its cash app flow comes from questionable sources, and its accounts receivable have been volatile.
Endologix's cash app flow from operations was predominantly from dubious sources, with stock-based compensation and related tax benefits being the largest contributors, amounting to 90.7%. This high dependence on such sources could indicate potential issues. Foolish investors, who prioritize understanding a company's economic health, often scrutinize the cash flow statement for a more accurate picture than the income statement alone.
The company's free cash app flow was significantly impacted by changes in accounts receivable, which accounted for 57.3% of cash from operations. This is a substantial drag on cash app flow. Moreover, Endologix investors should pay close attention to the company's accounts receivable, as the trailing twelve months (TTM) change was 2.4 times greater than the average swing over the past 5 fiscal years. This volatility could signal potential collection issues or changes in customer payment patterns.
Over the past 12 months, Endologix burned through $19.2 million in cash app while booking a net loss of $28.4 million. Given the company's cash app flow patterns and the volatility in accounts receivable, investors should closely examine these trends to make informed decisions. While earnings can be manipulated, cash app flow provides a more reliable measure of a company's economic output.
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