#33 - 5 Signs a Cannabis Company Is Going Broke
In this episode we emphasize the importance of digging into a company's financials for yourself to see if any warning signs are present. It is CRITICAL you are looking at a company's financials (sedar.com)
- How we realized there was a "mass extinction" event coming
- Why we sounded the alarm bells 30 days ago
- Learning from the companies who went broke: DYME as a case study
Warning Signs:
1. Cash balance rapidly declining
2. Large losses on income statement (and the importance of gross margins)
3. Cash Flow Statement vs Income Statement (why this matters)
4. "Circle The Drain" Financing - equity or debt raises at smaller amounts and worse terms
5. Lawsuits - Company gets into more lawsuits and disputes as they can't afford to pay their bills
Bonus - Importance of receivables and taxes payable
**Important - take a holistic view of the company. Having one of these items present is not nearly as having several red flags