Even when a business is losing money, it is possible for shareholders to make money if they buy a good business at the right price. For example, although the software-like–business service salesforce.com lost money for years as it grew of repeated revenue, if you have held action since 2005, you would have done very well. However, only a fool would ignore the risk that a loss company will burn very quickly.
Given this danger, we thought we would take a look at if Ocean resources Alpha Berhad (Klse: Aorb) Shareholders should worry about burning her money. In this report, we will consider the company’s annual negative cash flow, referring to it as ‘burning money’. We will start by comparing her money burning with her cash reserves to calculate her cash runway.
See our latest analysis for Alpha Ocean Resources Berhad
The appearance of a company’s money is the amount of time it would take to burn through its cash reserves with its current cash burn rate. In December 2024, Alpha Ocean Resources Berhad had RM2.8 million money, and was without debt. Seeing last year, the company was burned through RM3.1m. So she had a money track for nearly 11 months from December 2024. This is a fairly short money track, indicating that the company either has to reduce its annual money burn or fill its money. The image below shows how its cash balance is changing in recent years.
In our opinion, Alpha Ocean Resources Berhad still does not produce significant amounts of operating income, as it reported only RM7.8 million in the last twelve months. Therefore, for the purposes of this analysis we will focus on how the burning of money is being followed. Cash has been burned 147% from year to year certainly tests our nerves. This type of spending increase cannot continue for long before it causes balance of balance in general. In reality, this article does only a brief study of company growth data. You can take a look at how Alpha Ocean Resources Berhad is increasing revenue over time by checking this visualization of income increase.
Given his cash burn trajectory, Berhad shareholders of Berhad Ocean resources should already think how easy it can be to raise further money in the future. Companies can collect capital through debt or net capital. Many companies end up issuing new shares to finance future growth. Looking at the burning of a company’s money compared to its market capitalization, we gain knowledge of how much shareholders would dilute if the company had to raise enough money to cover the burning of another year.