Thanks for the write-up! How should I interpret the game-related intangibles variation graph I'm not sure why it goes to negative when cash conversion is better for those years?
The content production account is a tracking of the cost incurred in games that are currently in development or recently released. Those cash outlays are not considered expenses in the year they happen, but once the game is released and starts generating revenue.
A negative variation in the content production account means that the company spent less cash in new game development than flowed through the profit and loss statement, meaning that the company spent less cash than it registered as an expense, and so cash conversion is better in those years (meaning the ratio between accounting profit and cash generated is more weighted toward cash than accounting profit in those years).
Can't wait for the conclusion :-)
There you go! https://www.dungeoninvesting.com/p/square-enix-strategy-allocation-valuation
Thanks for the write-up! How should I interpret the game-related intangibles variation graph I'm not sure why it goes to negative when cash conversion is better for those years?
Hi Danny!
The content production account is a tracking of the cost incurred in games that are currently in development or recently released. Those cash outlays are not considered expenses in the year they happen, but once the game is released and starts generating revenue.
A negative variation in the content production account means that the company spent less cash in new game development than flowed through the profit and loss statement, meaning that the company spent less cash than it registered as an expense, and so cash conversion is better in those years (meaning the ratio between accounting profit and cash generated is more weighted toward cash than accounting profit in those years).
Hope this helped!