Investment Thesis
Alliance Entertainment faces severe operational deterioration with revenue collapsing 99.7% YoY while reporting anomalous profitability metrics that lack credibility given the revenue base. Negative operating cash flow of -$13.8M, minimal cash reserves of $1.4M, and deteriorating liquidity ratios indicate the company is burning capital and faces potential viability concerns.
Strengths
- Positive operating cash flow conversion not yet negative at full scale
- Current ratio of 1.35x provides minimal short-term liquidity cushion
- Total assets of $434.1M provide some asset base for potential restructuring
Risks
- Revenue collapse of 99.7% YoY indicates business model failure or data anomaly
- Negative free cash flow of -$14.5M with only $1.4M cash on hand creates imminent solvency risk
- Reported net margin of 891.8% on $1.6M revenue is mathematically inconsistent and suggests financial statement reliability issues
- Operating cash flow of -$13.8M contradicts reported $27.8M operating income, indicating potential earnings quality problems
- Zero insider filings in last 90 days suggests possible management disengagement during crisis period
- Quick ratio of 0.79x indicates potential working capital strain and inability to meet short-term obligations
Key Metrics to Watch
- Quarterly revenue trend and customer retention rates to confirm viability
- Operating cash flow versus reported earnings quality
- Cash burn rate and months of runway remaining
- Debt covenant compliance status and refinancing prospects
Financial Metrics
Revenue
1.6M
Net Income
14.3M
EPS (Diluted)
$0.28
Free Cash Flow
-14.5M
Total Assets
434.1M
Cash
1.4M
Profitability Ratios
Gross Margin
N/A
Operating Margin
1,739.2%
Net Margin
891.8%
ROE
12.1%
ROA
3.3%
FCF Margin
-907.8%
Balance Sheet & Liquidity
Current Ratio
1.35x
Quick Ratio
0.79x
Debt/Equity
0.00x
Debt/Assets
72.9%
Interest Coverage
8.70x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-19T15:08:11.067050 |
Data as of: 2025-12-31 |
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