Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES
We monitor such metrics as days’ sales outstanding, inventory requirements, inventory turns, estimated future purchasing requirements and capital expenditures to project liquidity needs, as well as evaluate return on assets. Our primary sources of funds are operating cash flows, existing working capital and our Revolver Loan (“Revolver”) with our Bank.
We gauge our liquidity and financial stability by various measurements, some of which are shown in the following table:
| | | | | | |
| | March 31, 2022 | | December 31, 2021 |
Working capital | | $ | 22,375,000 | | $ | 24,598,000 |
Current ratio | | | 2.15 to 1 | | | 3.04 to 1 |
Shareholders’ equity | | $ | 43,181,000 | | $ | 43,840,000 |
Credit facility
Our Credit Facility is discussed in detail in Note 9, to our Consolidated Financial Statements. Discussed therein, we and the Bank entered into an amendment that, among other things, increased the Revolver borrowing commitment by $2,000,000 to $18,000,000 through June 30, 2022.
At March 31, 2022, there was approximately $3,360,000 available to us under its Revolver arrangement.
Should the need arise whereby the current Credit Agreement is insufficient; we believe that the current Agreement could be expanded, and/or we could obtain additional funds based on the value of our real property.
Cash flows
For the three-month period ended March 31, 2022, cash used by operating activities was $3,972,000, compared to cash used by operating activities for the year ended December 31, 2021, of $4,149,000. At March 31, 2022, our consolidated cash balance was $642,000, compared to $539,000 at December 31, 2021. Cash at our UAT subsidiary was $190,000 at March 31, 2022 and December 31, 2021, respectively. We operate under the terms and conditions of the Credit Agreement. As a result, all domestic cash receipts are remitted to Capital One lockboxes.
Our total debt to total book capitalization (total debt divided by total debt plus equity) on March 31, 2022, was 22.5%, compared to 11.6% on December 31, 2021.
Our working capital needs will increase due to anticipated growth, and a roll-out of a new tools program to our Retail customer. As a result, our Revolver borrowings will likely increase in the first half of 2022 and should then decline throughout the remainder of 2022.
During the three-month period ended March 31, 2022, we completed the JGC acquisition, with a purchase price of $2,300,000, plus acquisition expenses that included among other things, legal, accounting, and relocation expenses. (See Note 2).
During the three-month period ended March 31, 2022, we used $380,000 for capital expenditures, compared to $68,000 during the same period in the prior year. Capital expenditures currently planned for the remainder of 2022 are approximately $800,000, which we expect will be financed through the Credit Facility.