Total Liabilities – Free Bassuk http://freebassuk.com/ Tue, 21 Jun 2022 22:33:24 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://freebassuk.com/wp-content/uploads/2021/07/icon.png Total Liabilities – Free Bassuk http://freebassuk.com/ 32 32 Does Confidence Intelligence Holdings (HKG:1967) have a healthy balance sheet? https://freebassuk.com/does-confidence-intelligence-holdings-hkg1967-have-a-healthy-balance-sheet/ Tue, 21 Jun 2022 22:33:24 +0000 https://freebassuk.com/does-confidence-intelligence-holdings-hkg1967-have-a-healthy-balance-sheet/ Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We can see that Trust Intelligence Holdings Limited (HKG:1967) uses debt in his business. But the more important question is: what risk […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We can see that Trust Intelligence Holdings Limited (HKG:1967) uses debt in his business. But the more important question is: what risk does this debt create?

What risk does debt carry?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more common (but still costly) situation is when a company has to dilute shareholders at a cheap share price just to keep debt under control. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. When we look at debt levels, we first consider cash and debt levels, together.

See our latest analysis for Confidence Intelligence Holdings

How much debt does Confidence Intelligence Holdings have?

The image below, which you can click on for more details, shows that Confidence Intelligence Holdings had 12.6 million yen in debt at the end of December 2021, a reduction from 13.9 million yen on a year. However, he has 65.0 million National Yen in cash to offset this, resulting in a net cash of 52.4 million National Yen.

SEHK: 1967 Debt to Equity June 21, 2022

A look at the liabilities of Confidence Intelligence Holdings

Zooming in on the latest balance sheet data, we can see that Confidence Intelligence Holdings had liabilities of 70.2 million Canadian yen due within 12 months and liabilities of 33.4 million domestic yen due beyond. In return, he had 65.0 million Cambodian yen in cash and 110.0 million Cambodian yen in receivables due within 12 months. So he actually has 71.4 million Canadian yen After liquid assets than total liabilities.

Given the size of Confidence Intelligence Holdings, it appears its liquid assets are well balanced with its total liabilities. It is therefore highly unlikely that the ¥6.35 billion CN Company will run out of cash, but it is still worth keeping an eye on the balance sheet. In short, Confidence Intelligence Holdings has clean cash, so it’s fair to say that it doesn’t have a lot of debt!

But the bad news is that Confidence Intelligence Holdings has seen its EBIT plunge 12% in the last twelve months. If this rate of decline in profits continues, the company could find itself in a difficult situation. The balance sheet is clearly the area to focus on when analyzing debt. But it is the profits of Confidence Intelligence Holdings that will influence the balance sheet in the future. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. Confidence Intelligence Holdings may have net cash on the balance sheet, but it is always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its needs and its ability to manage debt. Over the past three years, Confidence Intelligence Holdings has experienced substantial negative free cash flow, in total. While this may be the result of spending for growth, it makes debt much riskier.

Summary

While we sympathize with investors who find debt a concern, you should keep in mind that Confidence Intelligence Holdings has net cash of 52.4 million yen, as well as more liquid assets than liabilities. We therefore have no problem with the use of debt by Confidence Intelligence Holdings. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks reside on the balance sheet, far from it. For example, Confidence Intelligence Holdings has 3 warning signs (and 2 that shouldn’t be ignored) that we think you should know about.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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We think China Petroleum & Chemical (HKG:386) is taking risks with its debt https://freebassuk.com/we-think-china-petroleum-chemical-hkg386-is-taking-risks-with-its-debt/ Mon, 20 Jun 2022 07:57:29 +0000 https://freebassuk.com/we-think-china-petroleum-chemical-hkg386-is-taking-risks-with-its-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. We note that China Petroleum and Chemical Company (HKG:386) has a debt on its balance sheet. But should shareholders worry about its use of debt?

When is debt dangerous?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are mercilessly liquidated by their bankers. However, a more common (but still costly) situation is when a company has to dilute shareholders at a cheap share price just to keep debt under control. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first thing to do when considering how much debt a business has is to look at its cash flow and debt together.

See our latest analysis for China Petroleum & Chemical

What is China Petroleum & Chemical’s debt?

You can click on the graph below for historical figures, but it shows that in March 2022, China Petroleum & Chemical had a debt of 194.3 billion Canadian yen, an increase from 169.5 billion yen Canadians, over one year. However, he has 188.3 billion Canadian yen in cash to offset this, resulting in a net debt of approximately 6.03 billion Canadian yen.

SEHK: 386 Historical Debt to Equity June 20, 2022

How strong is China Petroleum & Chemical’s balance sheet?

According to the latest published balance sheet, China Petroleum & Chemical had liabilities of 730.0 billion Canadian yen due within 12 months and liabilities of 349.3 billion Canadian yen due beyond 12 months. On the other hand, it had liquid assets of 188.3 billion Canadian yen and 84.0 billion national yen of receivables due within one year. Thus, its liabilities outweigh the sum of its cash and (short-term) receivables of 806.9 billion Canadian yen.

The deficiency here weighs heavily on the CN¥470.1b business itself, like a child struggling under the weight of a huge backpack full of books, his sports gear and a trumpet. We would therefore be watching his balance sheet closely, no doubt. Ultimately, China Petroleum & Chemical would likely need a major recapitalization if its creditors demanded repayment. China Petroleum & Chemical may have virtually no net debt, but it has a lot of liabilities.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

With debt at a measly 0.027 times EBITDA and an EBIT covering interest of 57.4 times, it is clear that China Petroleum & Chemical is not a desperate borrower. Indeed, relative to its earnings, its leverage seems light as a feather. On top of that, China Petroleum & Chemical has increased its EBIT by 75% in the last twelve months, and this growth will make it easier to manage its debt. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether China Petroleum & Chemical can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. It is therefore worth checking how much of this EBIT is supported by free cash flow. Over the past three years, China Petroleum & Chemical has recorded free cash flow of 39% of its EBIT, which is lower than expected. This low cash conversion makes debt management more difficult.

Our point of view

While the level of China Petroleum & Chemical’s total liabilities makes us nervous. For example, its interest coverage and EBIT growth rate give us some confidence in its ability to manage its debt. From all the angles mentioned above, it seems to us that China Petroleum & Chemical is a bit of a risky investment due to its leverage. Not all risk is bad, as it can increase stock price returns if it pays off, but this leverage risk is worth keeping in mind. The balance sheet is clearly the area to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example, we have identified 2 warning signs for China Petroleum & Chemical (1 is a little worrying) you should be aware.

If, after all that, you’re more interested in a fast-growing company with a strong balance sheet, check out our list of cash-neutral growth stocks right away.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Compass Therapeutics Reports F – GuruFocus.com https://freebassuk.com/compass-therapeutics-reports-f-gurufocus-com/ Sat, 18 Jun 2022 14:05:00 +0000 https://freebassuk.com/compass-therapeutics-reports-f-gurufocus-com/ The FDA cleared the Investigational New Drug Application for CTX-009 (DLL4 X VEGF-A bispecific) in January, allowing the company to expand the ongoing Phase 2 study in patients with prostate cancer. bile ducts (BTC) in a global study and initiate dosing to patients in the United States in early Q3 2022 The company reported interim […]]]>
  • The FDA cleared the Investigational New Drug Application for CTX-009 (DLL4 X VEGF-A bispecific) in January, allowing the company to expand the ongoing Phase 2 study in patients with prostate cancer. bile ducts (BTC) in a global study and initiate dosing to patients in the United States in early Q3 2022
  • The company reported interim data from the ongoing Phase 2 study of CTX-009 and paclitaxel in patients with advanced BTC demonstrating an overall response rate (ORR) of 42% and clinical benefit rate ( CBR) of 92% among the first 24 patients recruited and treated with median intermediate study patient duration of approximately 6 months
  • The company has completed enrollment in the Phase 1b monotherapy study of CTX-471 (CD137 agonist) and reported 3 partial responses in patients with advanced solid tumors who received one dose of CTX-471 following progression of a prior PD-1/PD-L1 checkpoint inhibitor
  • CTX-8371 GMP manufacturing campaign has commenced and program is on track for IND in Q1 2023
  • $136.4 million in cash and cash equivalents at the end of the first quarter

BOSTON, May 09, 2022 (GLOBE NEWSWIRE) — Compass Therapeutics, Inc. (CMPX), a clinical-stage biopharmaceutical company focused on oncology and developing proprietary antibody-based treatments to treat multiple human diseases, announced today its financial results for the first quarter of 2022 today.

Development pipeline

CTX-009 (DLL4 and VEGF-A bispecific antibody)

In January, the company announced that the FDA had cleared its IND application for CTX-009, and in May the company released interim results from a Phase 2 study of CTX-009 in combination with the paclitaxel in patients with BTC. The data shows that:

  • CTX-009 demonstrated an overall response rate (ORR) of 42% based on 10 patients with partial responses (PRs), including 9 PRs confirmed by RECIST 1.1 and 1 PR awaiting confirmation
  • CTX-009 demonstrated anti-tumor activity in previously treated patients with a clinical benefit rate (CBR) of 92% based on 22 patients with PR or stable disease (SD) out of 24 patients enrolled
  • CTX-009 was well tolerated and preliminary safety profile is consistent with phase 1 studies

CTX-471 (CD137 agonist)

  • As of February 25, 2022, 49 patients with 15 different cancers have been enrolled in the study and 38 of these patients are evaluable. Of the 38 evaluable patients, 3 patients had PR; the first two have been confirmed by RECIST 1.1 and the third PR is unconfirmed. Additionally, 19 patients achieved stable disease, leading to a preliminary ORR of 8% and CBR of 58%
  • The 3 partial responses observed in the study were one patient with advanced small cell lung cancer, one patient with metastatic melanoma, and one patient with metastatic melanoma of mucosal origin.

CTX-8371 (bispecific antibody PD-1 and PD-L1)

  • CTX-8371 GMP manufacturing campaign has commenced and program is on track for IND in Q1 2023
  • The Company presented preclinical data on CTX-8371 involving a unique mechanism of action (MOA) that involves PD-1 cell surface cleavage, at the 2022 American Association for Cancer Research (AACR) Annual Meeting )

First quarter 2022 financial results

  • Treasury: As of March 31, 2022, cash and cash equivalents were $136.4 million, compared to $39.7 million as of March 31, 2021, providing the company with an expected cash trail through the second half 2024. The company used $7.9 million of cash for fund operations in the first quarter of 2022.
  • Research and development (R&D) expenditure: R&D expenses were $4.4 million for the first quarter ended March 31, 2022, compared to $4.7 million for the same period in 2021, a decrease of $0.3 million or 6%.
  • General and administrative expenses (G&A): General and administrative expenses were $2.7 million for the first quarter ended March 31, 2022, compared to $2.6 million for the same period in 2021, an increase of $0.1 million or 5%.
  • Net loss: Net loss for the first quarter ended March 31, 2022 was $7.2 million or $0.07 per common share, compared to $7.3 million or $0.14 per common share for the same period in 2021.

About Compass Therapeutics

Compass Therapeutics, Inc. is a clinical-stage oncology-focused biopharmaceutical company developing proprietary antibody-based therapies to treat several human diseases. The scientific focus of Compass is the relationship between angiogenesis, the immune system and tumor growth. The Company’s pipeline of novel product candidates is designed to target several critical biological pathways necessary for an effective anti-tumor response. These include modulation of microvasculature via agents targeted to angiogenesis, induction of a potent immune response via activators on effector cells in the tumor microenvironment, and attenuation of immunosuppressive mechanisms used by tumors to escape immune surveillance. Compass plans to advance its product candidates through clinical development as stand-alone therapies and in combination with proprietary pipeline antibodies based on supporting clinical and non-clinical data. The company was founded in 2014 and is based in Boston, Massachusetts. For more information, visit the Compass Therapeutics website at https://www.compasstherapeutics.com.

Forward-looking statements

This press release contains forward-looking statements. Statements in this press release that are not purely historical are forward-looking statements. These forward-looking statements include, among other things, references to the Company’s financial condition to continue to advance its product candidates, expectations regarding the Company’s cash flow, business and development plans, and statements regarding the Company’s product candidates, their development, regulatory plans with respect thereto and their therapeutic potential, anticipated interactions with regulatory authorities and anticipated clinical development. Actual results could differ from those projected in the forward-looking statements due to many factors. These factors include, among others, the Company’s ability to raise the additional funds it will need to pursue its business and product development plans, the uncertainties inherent in developing product candidates and operating as a development-stage company, the Company’s ability to identify additional product candidates to develop, the Company’s ability to develop, complete clinical trials, obtain approvals and commercialize any of our product candidates, competition in the industry in which the Company operates and market conditions. These forward-looking statements are made as of the date of this press release, and the Company undertakes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the statements. forward-looking, except as required by law. Investors should review all of the information set forth herein and should also refer to the disclosure of risk factors set forth in the reports and other documents we file with the SEC available at www.sec.gov, including, without s limited to, our Form 10-Q for the quarter ended March 31, 2022, and our subsequent filings with the SEC.

Contact Investor
Vered Bisker-Leib, President and Chief Operating Officer
[email protected]

Media Contact
Anna Gifford, Communications Manager
[email protected]
617-500-8099

Compass Therapeutics, Inc. and its subsidiaries
Consolidated Statement of Income (unaudited)
(In thousands, except per share data)
Quarter ended March 31
2022 2021
Operating costs :
Research and development $ 4,415 $ 4,704
general and administrative 2,767 2,635
Total operating expenses 7,182 7,339
Operating loss (7,182 ) (7,339 )
Other income (expenses) 20 (83 )
Net loss $ (7,162 ) $ (7,422 )
Net loss per share – basic and diluted $ (0.07 ) $ (0.14 )
Basic and Diluted Weighted Average Shares Outstanding 100,858 51,313
Compass Therapeutics, Inc. and its subsidiaries
Consolidated balance sheets
(In thousands, except nominal value)
March, 31st,
2022
(unaudited)
The 31st of December,
2021
(checked)
Assets
Current assets:
Cash and cash equivalents $ 136,379 $ 144,514
Prepaid expenses and other current assets 3,904 2,591
Total current assets 140,283 147 105
Property and equipment, net 2,142 2,243
Operating Lease, Right-of-Use Asset (“ROU”) 3,819 4,089
other assets 320 320
Total assets $ 146,564 $ 153,757
Liabilities and equity
Current liabilities:
Accounts payable $ 257 $ 867
Increased expenses 8,050 8,775
Obligations under operating leases, current portion 1,027 989
Total current liabilities 9,334 10,631
Obligations under operating leases, long-term portion 2,740 3,048
Total responsibilities 12,074 13,679
Equity:
Common Stock, $0.0001 par value: 300,000 shares authorized; 101,286 and 101,303 shares issued as of March 31, 2022 and December 31, 2021 respectively; 100,905 and 100,832 shares outstanding as of March 31, 2022 and December 31, 2021, respectively ten ten
Premium 375 231 373,657
Accumulated deficit (240,751 ) (233,589 )
Full shareholder equity 134,490 140,078
Total Liabilities and Equity $ 146,564 $ 153,757

Compass-Therapeutics.png

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Does C Cheng Holdings (HKG:1486) have a healthy balance sheet? https://freebassuk.com/does-c-cheng-holdings-hkg1486-have-a-healthy-balance-sheet/ Thu, 16 Jun 2022 22:20:17 +0000 https://freebassuk.com/does-c-cheng-holdings-hkg1486-have-a-healthy-balance-sheet/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Like many other companies C Cheng Holdings Limited (HKG:1486) uses debt. But the real question is whether this debt makes the business risky.

Why is debt risky?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, it exists at their mercy. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more frequent (but still costly) event is when a company has to issue shares at bargain prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, many companies use debt to finance their growth, without any negative consequences. When we think about a company’s use of debt, we first look at cash and debt together.

Check out our latest analysis for C Cheng Holdings

How much debt does C Cheng Holdings have?

As you can see below, at the end of December 2021, C Cheng Holdings had a debt of HK$76.3 million, compared to HK$60.6 million a year ago. Click on the image for more details. But on the other hand, it also has HK$215.3 million in cash, resulting in a net cash position of HK$139.0 million.

SEHK: 1486 Historical Debt to Equity June 16, 2022

A look at the liabilities of C Cheng Holdings

Zooming in on the latest balance sheet data, we can see that C Cheng Holdings had liabilities of HK$305.5 million due within 12 months and liabilities of HK$75.9 million due beyond. On the other hand, it had a cash position of HK$215.3 million and HK$475.0 million of receivables within one year. So he actually has HK$308.9 million After liquid assets than total liabilities.

This surplus strongly suggests that C Cheng Holdings has a rock-solid balance sheet (and debt is nothing to worry about). With that in mind, one could argue that its track record means the company is capable of dealing with some adversity. Simply put, the fact that C Cheng Holdings has more cash than debt is arguably a good indication that it can safely manage its debt.

We also note that C Cheng Holdings improved its EBIT from last year’s loss to a positive result of HK$3.2 million. When analyzing debt levels, the balance sheet is the obvious starting point. But you can’t look at debt in total isolation; since C Cheng Holdings will need revenue to repay this debt. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

Finally, while the taxman may love accounting profits, lenders only accept cash. C Cheng Holdings may have net cash on the balance sheet, but it is always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its needs and its ability to manage debt. Over the past year, C Cheng Holdings has had substantial negative free cash flow, overall. While this may be the result of spending for growth, it makes debt much riskier.

Summary

While we sympathize with investors who find debt a concern, the bottom line is that C Cheng Holdings has net cash of HK$139.0 million and plenty of liquid assets. We are therefore not concerned about the use of C Cheng Holdings debt. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks reside on the balance sheet, far from it. These risks can be difficult to spot. Every business has them, and we’ve spotted 2 warning signs for C Cheng Holdings (1 of which is a little worrying!) that you should know about.

If you are interested in investing in businesses that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Is the TransMedics group (NASDAQ:TMDX) weighed down by its debt? https://freebassuk.com/is-the-transmedics-group-nasdaqtmdx-weighed-down-by-its-debt/ Sun, 12 Jun 2022 13:53:30 +0000 https://freebassuk.com/is-the-transmedics-group-nasdaqtmdx-weighed-down-by-its-debt/ Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when […]]]>

Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Above all, TransMedics Group, Inc. (NASDAQ:TMDX) is in debt. But does this debt worry shareholders?

What risk does debt carry?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. If things go really bad, lenders can take over the business. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. That said, the most common situation is when a company manages its debt reasonably well – and to its own benefit. When we look at debt levels, we first consider cash and debt levels, together.

See our latest analysis for TransMedics Group

How much debt does the TransMedics group carry?

As you can see below, TransMedics Group had $35.3 million in debt as of March 2022, about the same as the year before. You can click on the graph for more details. But he also has $72.0 million in cash to offset that, which means he has $36.7 million in net cash.

NasdaqGM: TMDX Debt to Equity June 12, 2022

How healthy is the balance sheet of the TransMedics group?

We can see from the most recent balance sheet that TransMedics Group had liabilities of US$20.3 million falling due within one year, and liabilities of US$43.8 million due beyond. In return, he had $72.0 million in cash and $11.7 million in receivables due within 12 months. So he actually has 19.6 million US dollars After liquid assets than total liabilities.

This short-term liquidity is a sign that TransMedics Group could probably easily repay its debt, as its balance sheet is far from stretched. In short, TransMedics Group has clean cash, so it’s fair to say that it doesn’t have a lot of debt! There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether TransMedics Group can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Year-over-year, TransMedics Group reported revenue of $39 million, a 55% gain, although it reported no earnings before interest and taxes. With a little luck, the company will be able to progress towards profitability.

So how risky is TransMedics Group?

Statistically speaking, businesses that lose money are riskier than those that make money. And the fact is that over the past twelve months, TransMedics Group has been losing money in earnings before interest and taxes (EBIT). And during the same period, it recorded a negative free cash outflow of US$45 million and recorded a book loss of US$47 million. However, he has a net cash position of US$36.7 million, so he has some time left before he needs more capital. With very solid revenue growth over the past year, the TransMedics Group could be on the road to profitability. Nonprofits are often risky, but they can also offer great rewards. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. We have identified 2 warning signs with TransMedics Group, and understanding them should be part of your investment process.

If you are interested in investing in businesses that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Technogym (BIT:TGYM) appears to be using debt sparingly https://freebassuk.com/technogym-bittgym-appears-to-be-using-debt-sparingly/ Sat, 11 Jun 2022 06:26:24 +0000 https://freebassuk.com/technogym-bittgym-appears-to-be-using-debt-sparingly/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many other companies Technogym SpA (BIT:TGYM) uses debt. But should shareholders worry about its use of debt?

What risk does debt carry?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. If things go really bad, lenders can take over the business. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first thing to do when considering how much debt a business has is to look at its cash and debt together.

Check out our latest analysis for Technogym

What is Technogym’s debt?

You can click on the chart below for historical numbers, but it shows Technogym had €107.5 million in debt in December 2021, up from €120.4 million a year earlier. However, he has €228.1m in cash which offsets this, leading to a net cash of €120.7m.

BIT: TGYM Debt to Equity June 11, 2022

A look at Technogym’s responsibilities

Zooming in on the latest balance sheet data, we can see that Technogym had liabilities of €346.6 million due within 12 months and liabilities of €105.0 million due beyond. In return for these obligations, it had cash of €228.1 million as well as receivables worth €124.1 million at less than 12 months. It therefore has liabilities totaling 99.3 million euros more than its cash and short-term receivables, combined.

Given that publicly traded Technogym shares are worth a total of €1.33 billion, it seems unlikely that this level of liability is a major threat. But there are enough liabilities that we certainly recommend that shareholders continue to monitor the balance sheet in the future. While it has liabilities worth noting, Technogym also has more cash than debt, so we’re pretty confident it can manage its debt safely.

On another positive note, Technogym increased its EBIT by 12% compared to last year, further increasing its ability to manage its debt. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether Technogym can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. Although Technogym has net cash on its balance sheet, it’s always worth looking at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how fast it’s building (or erodes) this cash balance. . Fortunately for all shareholders, Technogym has actually produced more free cash flow than EBIT over the past three years. This kind of high cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Summary

While it is always a good idea to look at a company’s total liabilities, it is very reassuring that Technogym has 120.7 million euros in net cash. And he impressed us with a free cash flow of 66 million euros, or 102% of his EBIT. So is Technogym’s debt a risk? This does not seem to us to be the case. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks reside on the balance sheet, far from it. For example – Technogym has 1 warning sign we think you should know.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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These 4 metrics indicate that the Go-Ahead Group (LON:GOG) is using debt reasonably well https://freebassuk.com/these-4-metrics-indicate-that-the-go-ahead-group-longog-is-using-debt-reasonably-well/ Tue, 07 Jun 2022 05:16:04 +0000 https://freebassuk.com/these-4-metrics-indicate-that-the-go-ahead-group-longog-is-using-debt-reasonably-well/ Warren Buffett said: “Volatility is far from synonymous with risk. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Above all, The Go-Ahead Group plc (LON:GOG) is in debt. But should shareholders worry about […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Above all, The Go-Ahead Group plc (LON:GOG) is in debt. But should shareholders worry about its use of debt?

When is debt dangerous?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, it exists at their mercy. In the worst case, a company can go bankrupt if it cannot pay its creditors. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business has is to look at its cash flow and debt together.

Check out our latest analysis for Go-Ahead Group

What is the debt of the Go-Ahead group?

The image below, which you can click on for more details, shows Go-Ahead Group had debt of £351.9m at the end of January 2022, a reduction from £409.0m over a year. But he also has £388.9m in cash to make up for that, meaning he has a net cash of £37.0m.

LSE: GOG Debt to Equity June 7, 2022

A Look at the Passives of the Go-Ahead Group

We can see from the most recent balance sheet that Go-Ahead Group had liabilities of £816.3m due within a year, and liabilities of £586.6m due to of the. On the other hand, it had cash of £388.9 million and £392.1 million of receivables due within a year. Thus, its liabilities total £621.9 million more than the combination of its cash and short-term receivables.

Given that this deficit is actually greater than the company’s market capitalization of £490.5m, we think shareholders really should be watching Go-Ahead Group’s debt levels, like a parent watching their child riding a bicycle for the first time. In the scenario where the company were to quickly clean up its balance sheet, it seems likely that shareholders would suffer significant dilution. Since Go-Ahead Group has more cash than debt, we’re pretty confident that it can manage its debt, despite having a lot of debt in total.

Above all, Go-Ahead Group has increased its EBIT by 70% over the last twelve months, and this growth will make it easier to manage its debt. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether Go-Ahead Group can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. Go-Ahead Group may have net cash on the balance sheet, but it’s always interesting to see how well the company converts its earnings before interest and tax (EBIT) into free cash flow, as this will influence both its needs and its ability to manage debt. Fortunately for all shareholders, Go-Ahead Group has actually produced more free cash flow than EBIT for the past three years. There’s nothing better than cash coming in to stay in your lenders’ good books.

Summary

Although Go-Ahead Group’s balance sheet is not particularly strong, due to total liabilities, it is clearly positive to see that it has a net cash position of £37.0 million. And it impressed us with free cash flow of £380m, or 429% of its EBIT. So we have no problem with Go-Ahead Group’s use of debt. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example, we have identified 1 warning sign for the Go-Ahead group of which you should be aware.

If, after all that, you’re more interested in a fast-growing company with a strong balance sheet, check out our list of cash-flowing growth stocks without further ado.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Quanta Services: Renewable energy could drive stock price higher (NYSE: PWR) https://freebassuk.com/quanta-services-renewable-energy-could-drive-stock-price-higher-nyse-pwr/ Fri, 03 Jun 2022 21:01:00 +0000 https://freebassuk.com/quanta-services-renewable-energy-could-drive-stock-price-higher-nyse-pwr/ tumsasedgars/iStock via Getty Images Quanta Services, Inc. (NYSE:PWR) reported optimistic sales growth in 2022 and improved EBITDA margin. In my opinion, if investors also notice the new investments being made in the renewable power generation industry, future estimates might improve as well. I see the risk of accidents, changes in labor markets and failed acquisitions. […]]]>

tumsasedgars/iStock via Getty Images

Quanta Services, Inc. (NYSE:PWR) reported optimistic sales growth in 2022 and improved EBITDA margin. In my opinion, if investors also notice the new investments being made in the renewable power generation industry, future estimates might improve as well. I see the risk of accidents, changes in labor markets and failed acquisitions. However, my discounted cash flow models implied significant upside potential in Quanta’s fair valuation.

Quantum Services

Quanta Services provides specialized contract infrastructure solutions primarily for customers in the electricity and gas industry in the United States. Additionally, management intends to expand its services to clients in many other industries in addition to operating in Canada, Australia and other international markets. In my view, greater diversification will most likely lead to less volatility in revenue growth.

10-k

10-k

10-Q

10-Q

There are two main reasons to review Quanta’s business model. First, the company operates in an industry that is expected to grow at a CAGR of 5% to 8% and has recurring and visible renewable energy generation projects. In my view, Quanta’s future revenue growth will most likely resemble that of the market.

IR presentation

IR presentation

The second reason is the recent guidance given in May 2022. Management expects adjusted EBITDA margins to reach 10% and to generate growing adjusted earnings per share. In my opinion, if the company really does deliver the expected numbers, the stock price will likely head north.

IR Presentation

IR presentation

Balance sheet

As of March 31, 2022, Quanta reported $238 million in cash, $13 billion in total assets, and $7 billion in total liabilities. I think the company’s balance sheet looks pretty healthy.

10-Q

10-Q

The total amount of financial debt is not small, so I took enough time to assess it. As of March 31, 2022, long-term debt equals $3.8 billion and short-term debt equals $21 million.

10-Q

10-Q

The company pays an interest rate between 0.95% and 3.05%. The senior bonds are payable in 2024, 2030, 2031 and 2041, and current net debt / adjusted EBITDA is 2.3x. In my opinion, Quanta will have to pay most of its debt after a few years. Also, with leverage of 2.3x Adjusted EBITDA, I think Quanta will most likely be able to pay.

IR presentation

IR Presentation

Standard case scenario: Renewable energy generation will likely increase revenue growth

In my base case scenario, I assumed that Quanta would continue to grow in the renewable power generation business. After the acquisition of Blattner, in my opinion, you can really say that the management is quite ambitious in this regard.

The Renewable Energy Infrastructure Solutions segment was added primarily due to our acquisition of Blattner Holding Company and its operating subsidiaries in 2021, as further described below. The acquisition of Blattner has significantly expanded and enhanced our existing services to the renewable power generation industry. Source: 10-k

If Quanta continues to invest organically or inorganically in the renewable power generation market, Quanta’s revenue growth will likely increase. Keep in mind that the global renewable power generation market is expected to grow at a CAGR of over 7.9%, which is higher than the growth shown by other targeted markets.

The global renewable power generation market demand was estimated at 6890.7 TWh in 2019 and is expected to grow at a compound annual growth rate of 7.9% from 2020 to 2027. Source: Market Size Report renewable energy production

I think the company is well diversified and will likely be more so as Quanta expands geographically. In my opinion, if the number of customers increases in the future, more investors are likely to be interested in Quanta’s business model. Demand for the stock could increase, which could drive up the company’s stock price:

For the year ended December 31, 2021, our largest customer represented 7% of our consolidated revenue and our top ten customers represented 38% of our consolidated revenue. Source: 10-k

Under normal circumstances, I think sales growth between 4% and 12% seems reasonable. Moreover, with an EBITDA margin of around 12%, an operating margin close to 8% and investments/sales of 2.25%, the 2026 free cash flow would amount to 1.476 billion dollars. Note that I assumed a change in working capital to sales ratio of 2%, which is close to numbers reported by Quanta in the past:

Author's DCF model

Author’s DCF model

Y-Charts

Y-Charts

In the end, using an 8% discount and with an EV/EBITDA ratio close to 11x, I obtained an equity valuation of $35 billion and a fair price of $247. Notice I’m not that optimistic about my exit multiple. The industry is trading at 10.3x EBITDA.

Author's DCF model

Author’s DCF model

Failed acquisitions, accidents and lack of workers could result in $50 per share

Quanta acquired Blattner for $2.37 billion in cash and 3,326,955 shares. The acquisition wasn’t small at all, so I hope the post-merger acquisition went well. There are risks. If management has paid too much, or if the expected synergies are not obtained, accountants may have to write down the goodwill. As a result, I think some shareholders might sell their shares, causing the stock price to drop:

The success of our acquisition of Blattner will depend, in part, on our ability to realize the anticipated benefits of a successful integration of Blattner’s businesses. We plan to devote significant management attention and resources to integrating our business practices and operations with those of Blattner so that we can fully realize the anticipated benefits of the acquisition. Nevertheless, the business and assets acquired may not succeed, achieve the anticipated financial results or continue to grow at the same rate as when operated independently or may require greater resources and investments than originally anticipated. The acquisition of Blattner could also result in the assumption of unknown or contingent liabilities. Potential difficulties we may encounter in the integration process. Source: 10-k

Quanta Services could suffer a significant number of accidents, including fires, explosions or any other type of damage. In the worst case, service delivery could be impossible, resulting in lower revenue growth. The Quanta brand could also be damaged, which could very negatively affect the valuation of Quanta’s shares:

Due to the nature of the services we provide and the conditions under which we and our clients operate, our business is subject to operational risks and accidents that can result in significant liability. These operational risks include, but are not limited to, electricity, fires, explosions, leaks, collisions, mechanical failures and damage caused by extreme weather conditions and natural disasters. In addition, some of our customers operate energy and communications infrastructure assets in locations and environments that increase the likelihood and/or severity of these operational risks, including due to climate change and other factors in recent years. Source: 10-k

Quanta Services can also suffer significantly if the number of skilled workers willing to work for the company decreases. Management may have to pay higher salaries, resulting in lower free cash flow margins. As a result, I think the stock valuation could decline significantly:

The pool of skilled workers in some of our industries has also been reduced, and may be further reduced, primarily due to the aging of the utility workforce and labor availability issues at higher term, including experienced program managers and qualified line mates available for our Electric Power Infrastructure Solutions and experienced supervisors and foremen for our Underground Utility and Infrastructure Solutions segment. Source: 10-k

Under adverse conditions, I assumed sales growth of -15% in 2024, -5% in 2025 and 5% in 2026. EBITDA margin was also assumed at 10% with EBIT/Sales of 6 %. The resulting 2026 EBIAT is $705 million.

Author's DCF model

Author’s DCF model

Additionally, assuming conservative changes in working capital and capital expenditures, free cash flow would be between $790 million and $668 million. The free cash flow margin would be close to 4%, which is significantly lower than the expectations reported in the previous case scenario.

Author's DCF model

Author’s DCF model

With the previous growth in net earnings, Quanta is unlikely to find many stock buyers. In the worst case, I think the cost of equity would increase significantly. Therefore, I used a 10% discount in 2023. The results with an exit multiple of 7.85x include a stock valuation of $7.2 billion and a fair price of $50.

Author's DCF model

Author’s DCF model

Carry

Quanta Services announced optimistic EBITDA margin figures for 2022. With the most recent acquisition, management is now investing a significant sum in the renewable energy industry, which will likely lead to further revenue growth. In my view, if management continues to expand its geographic footprint and the number of customers increases, revenue volatility may decrease. I see some risks related to acquisition failures and labor risks. However, the current stock price seems too low.

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Is CN Asia Corporation Bhd (KLSE:CNASIA) using too much debt? https://freebassuk.com/is-cn-asia-corporation-bhd-klsecnasia-using-too-much-debt/ Thu, 02 Jun 2022 00:04:27 +0000 https://freebassuk.com/is-cn-asia-corporation-bhd-klsecnasia-using-too-much-debt/ David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can […]]]>

David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Like many other companies CN Asia Corporation Bhd (KLSE:CNASIA) uses debt. But the real question is whether this debt makes the business risky.

When is debt a problem?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, many companies use debt to finance their growth, without any negative consequences. When we think about a company’s use of debt, we first look at cash and debt together.

Check out our latest analysis for CN Asia Corporation Bhd

What is CN Asia Corporation Bhd’s debt?

As you can see below, at the end of March 2022, CN Asia Corporation Bhd had a debt of RM8.09 million, compared to RM2.51 million a year ago. Click on the image for more details. But on the other hand, he also has RM12.5 million in cash, resulting in a net cash position of RM4.46 million.

KLSE:CNASIA Debt to equity June 1, 2022

A look at the liabilities of CN Asia Corporation Bhd

According to the latest published balance sheet, CN Asia Corporation Bhd had liabilities of RM7.34 million due within 12 months and liabilities of RM3.86 million due beyond 12 months. In return, he had RM12.5 million in cash and RM22.6 million in debt due within 12 months. Thus, he can boast of having RM24.0 million more liquid assets than total Passives.

This luscious liquidity means CN Asia Corporation Bhd’s balance sheet is as strong as a giant sequoia. With that in mind, one could argue that its track record means the company is capable of dealing with some adversity. Simply put, the fact that CN Asia Corporation Bhd has more cash than debt is arguably a good indication that it can safely manage its debt. There is no doubt that we learn the most about debt from the balance sheet. But you can’t look at debt in total isolation; since CN Asia Corporation Bhd will need revenue to repay this debt. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

Over the past year, CN Asia Corporation Bhd recorded a loss before interest and tax and actually reduced its revenue by 28% to RM11 million. To be honest, that doesn’t bode well.

So how risky is CN Asia Corporation Bhd?

By their very nature, companies that lose money are riskier than those with a long history of profitability. And we note that CN Asia Corporation Bhd recorded a loss of earnings before interest and taxes (EBIT) over the past year. Indeed, at that time, he burned RM25 million of cash and suffered a loss of RM13 million. Since it only has net cash of RM4.46 million, the company may need to raise more capital if it does not break even soon. Overall, its balance sheet doesn’t look too risky, at the moment, but we’re still cautious until we see positive free cash flow. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. Be aware that CN Asia Corporation Bhd shows 5 warning signs in our investment analysis and 1 of them cannot be ignored…

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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We believe that genOway Société anonyme (EPA:ALGEN) has a good part of the debt https://freebassuk.com/we-believe-that-genoway-societe-anonyme-epaalgen-has-a-good-part-of-the-debt/ Tue, 31 May 2022 07:49:28 +0000 https://freebassuk.com/we-believe-that-genoway-societe-anonyme-epaalgen-has-a-good-part-of-the-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing a company’s risk. […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing a company’s risk. Like many other companies genOway Public limited company (EPA:ALGEN) uses debt. But should shareholders worry about its use of debt?

Why is debt risky?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. Of course, many companies use debt to finance their growth, without any negative consequences. The first step when considering a company’s debt levels is to consider its cash and debt together.

See our latest analysis for genOway Société anonyme

What is the net debt of genOway Société anonyme?

As you can see below, genOway Société anonyme had 10.8 million euros in debt, as of December 2021, roughly the same as the previous year. You can click on the graph for more details. On the other hand, he has €5.61 million in cash, resulting in a net debt of around €5.22 million.

ENXTPA: history of ALGEN’s debt to equity at May 31, 2022

How solid is the balance sheet of genOway Société anonyme?

It appears from the last balance sheet that genOway Société anonyme had liabilities of €8.28 million within one year and liabilities of €9.66 million beyond. On the other hand, it has cash of €5.61 million and €12.5 million in receivables at less than one year. These liquid assets therefore roughly correspond to the total liabilities.

This state of affairs indicates that the balance sheet of genOway Société anonyme appears to be quite solid, with its total liabilities being approximately equal to its liquidities. So while it’s hard to imagine the 31.6 million euro business struggling for cash, we still think it’s worth keeping an eye on its balance sheet. There is no doubt that we learn the most about debt from the balance sheet. But you can’t look at debt in total isolation; since genOway Société anonyme will need income to service this debt. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

Over 12 months, genOway Société anonyme achieved a turnover of €20 million, a gain of 20%, although it did not publish any results before interest and taxes. With a little luck, the company will be able to progress towards profitability.

Caveat Emptor

While we can certainly appreciate genOway Société anonyme’s revenue growth, its earnings before interest and tax (EBIT) loss is less than ideal. To be precise, the EBIT loss amounted to €789,000. On a more positive note, the company has cash, so it has some time to improve its operations before debt becomes an acute problem. But we’d be more likely to spend time trying to figure out the stock if the company was making a profit. So it seems too risky for our taste. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example genOway Société anonyme has 3 warning signs (and 1 that can’t be ignored) that we think you should know about.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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