Envirostar Inc has a market cap of $7.6 million; its shares were traded at around $1.08 with a P/E ratio of 36 and P/S ratio of 0.3.
Highlight of Business Operations:Cash increased by $257,965 during the nine month period of fiscal 2010 compared to an increase of $1,385,652 during the same period of fiscal 2009. The following summarizes the Company s Condensed Consolidated Statements of Cash Flows:
For the nine month period ended March 31, 2010, operating activities provided cash of $273,013 compared to $1,394,438 of cash provided during the same period of fiscal 2009. The cash provided by operating activities for the nine month period was primarily due to a reduction of $699,227 in inventories, as inventories were kept in line with incoming orders after heavy shipments made during the second quarter of fiscal 2010. Inventory levels are relatively low and inventory purchases should increase as orders improve with an improving economy. Cash was also provided by the Company s net earnings of $216,372 and non-cash expenses for depreciation and amortization of $61,489, partially offset by the collection of a $35,000 account receivable which resulted in a reversal of a previously recognized bad debt expense. Additional cash was provided by a decrease of $44,064 in accounts and trade notes receivable, a decrease of $91,760 in other current assets and a $38,184 increase in accounts payable and accrued expenses. These were partially offset by a $678,150 reduction in customer deposits as new orders lagged behind shipments during the period. Cash was also used to reduce accrued employee expenses of $173,123.
Most of the cash provided by operating activities for the first nine months of fiscal 2009 resulted from a $1,654,903 reduction in accounts and trade notes receivable, reflecting the collection of higher than normal accounts receivable that existed at the end of fiscal 2008 which related to record fourth quarter fiscal 2008 sales. Other cash generated by operating activities during the first nine months of fiscal 2009 was provided by the Company s net earnings of $518,069 and non-cash expenses for depreciation and amortization of $97,501 and bad debts of $42,288 offset by an increase of $54,310 in the provision for deferred income taxes. Included in bad debt expense was an increase in the provision for bad debts of $20,000 due to the slowing economy. The provision for deferred income taxes included a $72,212 reserve against certain returned inventories. Other cash was generated by a decrease in inventories of $443,678 and other assets of $21,502. This cash was offset by a reduction in accounts payable and accrued expenses of $392,778, accrued employee expenses of $245,467 and customer deposits of $581,070. Other uses of cash included a reduction of $41,387 associated with the amortization of the initial fee received by the Company from Whirlpool Corporation in January 2005 (which fee was fully amortized at December 31, 2008) and refundable income taxes and income taxes payable aggregating $67,491.
Investing activities for the first nine months of fiscal 2010 used cash of $15,048 compared to $8,671 used in the same period of fiscal 2009, mostly for capital purchases.
Development fees, franchise and license fees, commissions and other increased by $53,550 (22.2%) and $146,043 (262.8%), respectively, for the nine and three month periods ended March 31, 2010 from the same periods of fiscal 2009. The increases were attributable to commission income received during the third quarter of fiscal 2010 on a sale by another distributor for an installation made in our territory. Royalty and license fee income for both periods were lower due to the economic downturn.
Interest income decreased by $60,930 (87.5%) and $9,487 (81.9%) for the nine and three month periods of fiscal 2010, respectively, from the same periods of fiscal 2009 as a result of lower prevailing interest rates which offset higher average outstanding bank balances.
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