The chart shows the last three years and Last Twelve Months of Cash Flow From Operations (CFFO) for the six MSOs in the Viridian Capital Value Tracker database with market caps between $25M and $100M.

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Most companies showed positive adjusted EBITDA for 2021, but only half had positive CFFO. 

What is the difference? The difference primarily relates to two factors: taxes paid (expense minus changes in accruals), and changes in operating working capital (chiefly inventories and receivables).

Investors should pay more attention to CFFO because it is a GAAP number invariant to company choices of depreciation methods, inventory accounting methods, and valuation reserves. It can’t be fudged and tells the real picture of a company’s cash-generating capability.

The companies on the list fall into four groups:

C21 Investments (OTC: CXXIF) and Vext Science (OTC: VEXTF) were the only two companies to have a stable positive cash flow positive …

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