China Pharma Reports Improved Collection of Accounts Receivable

Sep.23.08 | About: China Pharma (CPHI)

China Pharma Holdings (NYSEMKT:CPHI) now says its Q3 results “could” show a positive cash flow. Last week, the company reported it expects a 40% increase in revenue during the period. China Pharma is doing well in terms of growth and profitability, but as we have reported over the past year, its growing Accounts Receivable numbers have kept the company from truly prospering. The company reports healthy profits, but the large increase in AR effectively cancels those profits.

Now, China Pharma has released a statement that says new collection policies are starting to have a positive effect.

So far this year, the company has been close to reporting a positive cash flow, so it would not take a huge change in its fortunes to achieve its positive cash flow goal. In the first six months of 2008, China Pharma reported $8.2 million in net income. But a $7.4 million increase in Accounts Receivable and $3.2 million in advances to suppliers consumed all of the company’s net income and left it with a negative cash flow of $886,000.

The company also says it has completed all the necessary work for moving its listing from the OTC Bulletin Board to the American Exchange. However, the company must have a minimum stock price of $3 before the AMEX will accept the listing. Monday, China Pharma was trading at $1.79, an increase of 10 cents on the session.

Disclosure: none.