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Rank: Veteran Joined: 1/20/2011 Posts: 1,820 Location: Nakuru
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Ericsson wrote:Fyatu wrote:VituVingiSana wrote:Fyatu wrote:Is it technically possible for a company to operate in negative working capital or should this(operating in -ve capital) be considered the 9th wonder of the world?
How do you explain revenues of 9 billions and a net profit of 80 million in the case of car and general? Hapa Kenya kweli kuna mambo. CMA, NSE..... anyone please explain in basic english the madness that is the Nairobi bourse 1) A firm can run on -ve working capital as long as it generates enough cashflow to service its debt. 2) A Balance Sheet is a snapshot of a "day" and the situation may have been different on the 29th of that month or the 1st of the next month. 3) FY 2017 was tough for equipment/engineering sales yet it managed a profit vs many made losses. Think of your not-so-favorite airline, cement firms (ARM and EAPCC), supermarket, sugar firm, etc. The Positives of Negative Working Capital Wireless communications and broadcasting firms have a knack for taking in other people's cash quicker than theirs goes out.http://ww2.cfo.com/cash-...gative-working-capital/
SafCom had -ve Working Capital (-27bn) as of 30 Sep 2018 but I would not consider SafCom in any sort of trouble... Each sector and firm has its quirks. Thanks @vvs for the explanation. This dark winter(bear) has been long. The business news from Kenyan newspapers and international ones has been all doom and gloom. CMA and NSE honchos on the other hand have not inspiring at all and any thoughts of buying into the bear in this our NSE is wrought with suspicion of book cooking and inaccurate financial reporting. That listed firm you thought had perfect governance and whose numbers look good might burn you to recognition. One cannot be faulted for being suspicious(bordering on paranoia) of all CEO's,boards and CFO's of listed companies in NSE. Take Kenya Power as an example. Everyone even ECD kids know that the 2017-2018 books are being cooked proper with some assorted viungo(tumeric,capsicam,garlic,pili pili manga,knorr cubes,royco mchuzi mix etc) hapa na pale.How can a monopoly which lights up East Africa largest economy(or so we are told) be this erratic as far as management is concerned? What magic did government of Mzee Kibaki do to this firm that Jubilee cannot do? I don't want to believe that maombi alias sadaka has something to do with this My fren fyatu,this was highlighted earlier. Be afraid of arap looto and firms under him This is very sad. A senior citizen told me that Kenya power paid for the kumera kumera/wembe ni ule ule/tano tena campaigns and i thought he was bluffing. Dumb money becomes dumb only when it listens to smart money
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Rank: Chief Joined: 1/3/2007 Posts: 18,052 Location: Nairobi
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Ericsson wrote:VituVingiSana wrote:wukan wrote:Fyatu wrote:Is it technically possible for a company to operate in negative working capital or should this(operating in -ve capital) be considered the 9th wonder of the world?
How do you explain revenues of 9 billions and a net profit of 80 million in the case of car and general? Hapa Kenya kweli kuna mambo. CMA, NSE..... anyone please explain in basic english the madness that is the Nairobi bourse I have seen this african proverb on soko mjinga manenoz huko twitter @cobbo3 "if foolish people don't go to the market, who will buy rotten bananas?"  Better than a turnover of 52bn (1H 2018) and a loss of 4bn  for a certain airline Can a debate be healthy without mentioning the name KQ? It's the benchmark on how bad it can be. As in, let's not screw up like KQ. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:wukan wrote:Fyatu wrote:Is it technically possible for a company to operate in negative working capital or should this(operating in -ve capital) be considered the 9th wonder of the world?
How do you explain revenues of 9 billions and a net profit of 80 million in the case of car and general? Hapa Kenya kweli kuna mambo. CMA, NSE..... anyone please explain in basic english the madness that is the Nairobi bourse I have seen this african proverb on soko mjinga manenoz huko twitter @cobbo3 "if foolish people don't go to the market, who will buy rotten bananas?" Better than a turnover of 52bn (1H 2018) and a loss of 4bn for a certain airline Can a debate be healthy without mentioning the name KQ? It's the benchmark on how bad it can be. As in, let's not screw up like KQ. One day you will grow out of the KQ jilt.. It better be soon. What will you have left to say when KQ posts a profit? The messes did happen at KQ and the company did post massive losses over the last six years.. But a turnaround is underway to restore the Pride of Africa. Thank me later
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Chief Joined: 1/3/2007 Posts: 18,052 Location: Nairobi
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obiero wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:wukan wrote:Fyatu wrote:Is it technically possible for a company to operate in negative working capital or should this(operating in -ve capital) be considered the 9th wonder of the world?
How do you explain revenues of 9 billions and a net profit of 80 million in the case of car and general? Hapa Kenya kweli kuna mambo. CMA, NSE..... anyone please explain in basic english the madness that is the Nairobi bourse I have seen this african proverb on soko mjinga manenoz huko twitter @cobbo3 "if foolish people don't go to the market, who will buy rotten bananas?" Better than a turnover of 52bn (1H 2018) and a loss of 4bn for a certain airline Can a debate be healthy without mentioning the name KQ? It's the benchmark on how bad it can be. As in, let's not screw up like KQ. One day you will grow out of the KQ jilt.. It better be soon. What will you have left to say when KQ posts a profit? The messes did happen at KQ and the company did post massive losses over the last six years.. But a turnaround is underway to restore the Pride of Africa. Thank me later I am thankful to you since 2012  Even when I had a moment of weakness and thought KQ was over the hump, your insults [remember those?] made me recoil. BTW, I do wish, sincerely, that KQ succeeds. It is sad to see once venerable firms like KQ, Uchumi, etc - even ARM - die. Furthermore, I have a stake in KQ through Treasury and KQLC and I would like to see my money repaid. I hope you do well in KQ or any other investment. I just feel there are better options, for me, out there. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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VituVingiSana wrote:obiero wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:wukan wrote:Fyatu wrote:Is it technically possible for a company to operate in negative working capital or should this(operating in -ve capital) be considered the 9th wonder of the world?
How do you explain revenues of 9 billions and a net profit of 80 million in the case of car and general? Hapa Kenya kweli kuna mambo. CMA, NSE..... anyone please explain in basic english the madness that is the Nairobi bourse I have seen this african proverb on soko mjinga manenoz huko twitter @cobbo3 "if foolish people don't go to the market, who will buy rotten bananas?" Better than a turnover of 52bn (1H 2018) and a loss of 4bn for a certain airline Can a debate be healthy without mentioning the name KQ? It's the benchmark on how bad it can be. As in, let's not screw up like KQ. One day you will grow out of the KQ jilt.. It better be soon. What will you have left to say when KQ posts a profit? The messes did happen at KQ and the company did post massive losses over the last six years.. But a turnaround is underway to restore the Pride of Africa. Thank me later I am thankful to you since 2012 Even when I had a moment of weakness and thought KQ was over the hump, your insults [remember those?] made me recoil. BTW, I do wish, sincerely, that KQ succeeds. It is sad to see once venerable firms like KQ, Uchumi, etc - even ARM - die. Furthermore, I have a stake in KQ through Treasury and KQLC and I would like to see my money repaid. I hope you do well in KQ or any other investment. I just feel there are better options, for me, out there. You are the wazua grandpa so I would never insult you directly.. Now about KQ, I never held any KQ upto 2014 which was the year after I completed purchase of my second real estate piece. I had excess cash from profitable trade in the Kibaki years and I made up my mind to get in as the losses eased up! A Sunil Shah type of strategy which has taken longer than I thought.. You know I am the one that stated the words DOA on its rights issue and luckily the internet never forgets.. Post #655 http://wazua.co.ke/forum.aspx?g=posts&m=514794
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 12/7/2012 Posts: 11,901
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Talk, talk, talk but no action..... https://www.businessdail...849150-37bd3w/index.htmlIn the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Member Joined: 1/1/2011 Posts: 396
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[quote=Angelica _ann]Talk, talk, talk but no action..... https://www.businessdail...49150-37bd3w/index.html[/quote] I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests.
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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obiero wrote:murchr wrote:obiero wrote:murchr wrote:Obiero, the NSE is not the economy. I believe you have half a point.. The NSE is not the economy but is a significant barometer to the same Not necessarily so. You could be right, but I think you are wrong https://www.businessdail...47630-xakb0t/index.html
Foreigners headed out of the NSE https://www.businessdail...852106-ckaovf/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Chief Joined: 1/3/2007 Posts: 18,052 Location: Nairobi
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jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/4/2009 Posts: 10,639 Location: NAIROBI
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VituVingiSana wrote:jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. @vvs This negative working capital of ksh.27bn you keep talking about I don't see it in the financial statements.I am seeing a positive figure Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Chief Joined: 1/3/2007 Posts: 18,052 Location: Nairobi
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Ericsson wrote:VituVingiSana wrote:jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. @vvs This negative working capital of ksh.27bn you keep talking about I don't see it in the financial statements.I am seeing a positive figure Current Assets - Current Liabilities in the 1H results but do note that it is irrelevant given the nature of their business. Prepaid sales/airtime are considered liabilities but these get used up. Even Bonga Points. You don’t get a refund. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: New-farer Joined: 5/19/2014 Posts: 68 Location: Migori
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VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. @vvs This negative working capital of ksh.27bn you keep talking about I don't see it in the financial statements.I am seeing a positive figure Current Assets - Current Liabilities in the 1H results but do note that it is irrelevant given the nature of their business. Prepaid sales/airtime are considered liabilities but these get used up. Even Bonga Points. You don’t get a refund. True. Any idea what makes up the 113B non-current assets. Learning to sit on my hands
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Rank: Elder Joined: 12/4/2009 Posts: 10,639 Location: NAIROBI
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ombaalbt wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. @vvs This negative working capital of ksh.27bn you keep talking about I don't see it in the financial statements.I am seeing a positive figure Current Assets - Current Liabilities in the 1H results but do note that it is irrelevant given the nature of their business. Prepaid sales/airtime are considered liabilities but these get used up. Even Bonga Points. You don’t get a refund. True. Any idea what makes up the 113B non-current assets. Retained earnings+share capital Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Member Joined: 1/1/2011 Posts: 396
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Ericsson wrote:ombaalbt wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:jmbada wrote:I agree. CMA is toothless in this. The firms are simply making losses, not commtting any offenses. Even requesting monthly updates is irrelevant and legally unenforceable. CMA is not on the executive board and has no right to even make such requests. The "action" on C&G is amusing when Safcom has -27bn Working Capital (1H 2018-19). Not that Safcom has anything to answer for! If a firm can manage on negative WC, so be it. Firms like C&G could convert ST loans into LT loans but that means little given a debt is still a debt. A firm may choose, given the economic circumstances or business line, to take on ST debt to finance inventory. Every sector is different, every firm is different. What seems to have spooked CMA is Nakumatt but not firms are Nakumatt. IMHO, a major cause of distress for firms that were doing reasonably well is over-expansion using expensive debt. In KE, debt is very expensive. There could be other causes eg changes in taxation, tech, relevance, etc. @vvs This negative working capital of ksh.27bn you keep talking about I don't see it in the financial statements.I am seeing a positive figure Current Assets - Current Liabilities in the 1H results but do note that it is irrelevant given the nature of their business. Prepaid sales/airtime are considered liabilities but these get used up. Even Bonga Points. You don’t get a refund. True. Any idea what makes up the 113B non-current assets. Retained earnings+share capital Positive Working Capital is NOT a continued listing requirement. This is a meaningless metric...and an affected performance monitoring mechanism. CMA does not run listed companies. Only the executive directors do so. Even the monthly or quarterly update requirement is completely toothless.
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Rank: Chief Joined: 1/3/2007 Posts: 18,052 Location: Nairobi
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CMA needs to look at firm where there is fraud or symptoms of fraud. It's not easy but it should liaise with the auditors, with the OK of the firms for legal reasons, to investigate matters of concern. CMA should also monitor directors and their insider dealings. Unga has 2 directors who are also a directors of NIC. Is all the business between the 2 legit? Or all deals between Seaboard and Unga at arms length? Is Unga's CEO also working for Seaboard? [Yes, according to the Annual Report, he was also paid by Seaboard but CMA allowed him to sit on the board that proposed the 40/- offer] Cracking down on "Negative Working Capital" without understanding the sector or business makes little business sense. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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VituVingiSana wrote:CMA needs to look at firm where there is fraud or symptoms of fraud.
It's not easy but it should liaise with the auditors, with the OK of the firms for legal reasons, to investigate matters of concern.
CMA should also monitor directors and their insider dealings.
Unga has 2 directors who are also a directors of NIC. Is all the business between the 2 legit?
Or all deals between Seaboard and Unga at arms length?
Is Unga's CEO also working for Seaboard? [Yes, according to the Annual Report, he was also paid by Seaboard but CMA allowed him to sit on the board that proposed the 40/- offer]
Cracking down on "Negative Working Capital" without understanding the sector or business makes little business sense. Atleast they understand KQ
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 12/4/2009 Posts: 10,639 Location: NAIROBI
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Tips for preparing your portfolio for economic slowdown and bear run; --Own stocks with good balance sheets and low debts --Consider short duration and bonds --Have at least 10% cash in your portfolio. Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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Ericsson wrote:Tips for preparing your portfolio for economic slowdown and bear run;
--Own stocks with good balance sheets and low debts
--Consider short duration and bonds
--Have at least 10% cash in your portfolio.
--In the event you have personal debt, use all excess cash to pay down the personal debt
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 12/7/2012 Posts: 11,901
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obiero wrote:Ericsson wrote:Tips for preparing your portfolio for economic slowdown and bear run;
--Own stocks with good balance sheets and low debts
--Consider short duration and bonds
--Have at least 10% cash in your portfolio.
--In the event you have personal debt, use all excess cash to pay down the personal debt Own defensive/resistance stocks e.g. BBK. Will not experience to much swings including profitability. In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Elder Joined: 6/23/2009 Posts: 13,474 Location: nairobi
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Angelica _ann wrote:obiero wrote:Ericsson wrote:Tips for preparing your portfolio for economic slowdown and bear run;
--Own stocks with good balance sheets and low debts
--Consider short duration and bonds
--Have at least 10% cash in your portfolio.
--In the event you have personal debt, use all excess cash to pay down the personal debt Own defensive/resistance stocks e.g. BBK. Will not experience to much swings including profitability. Since 2011, BBK has not grown any shareholder income substantially. Hio 🤷🏾♂️KES 0.8 dividend, afadhali niuze mitumba toi for a better annual return 
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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