Caffyns – Financial distress

I’ll use Piotroski’s nine variables to get an overview of financial distress risk at March 2021.

1. Is the company profitable?

In the year to March 2021 Caffyns made £1.4m profit after tax, therefore it gains a Piotroski point.

2. Does the company produce positive cash flow from operations?

Caffyns generated £4.6m of operating cash flows before movements in working capital, thus a Piotroski point is gained.

3. Has return on assets improved?

A profit in 2021 following a loss in 2020 means an improvement. Third Piotroski point.

4. Is cash flow greater than profits?

Yes. Fourth point scored.

5.  Has the ratio of long-term debt to average total assets during the year diminished?

For 2020: £11.8m/£94.7m = 12.46%

For 2021: £12.2m/£95.5m = 12.77%.

No Piotroski point.

6.  Has the current ratio improved?

Current

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