Does BioLife Solutions (NASDAQ: BLFS) Use Debt Risky?
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 risk.” So it can be obvious that you need to consider debt, when you think about how risky a given stock is because too much debt can sink a business. We note that BioLife Solutions, Inc. (NASDAQ: BLFS) has debt on its balance sheet. But the real question is whether this debt makes the business risky.
When is debt dangerous?
Debts and other liabilities become risky for a business when it cannot easily meet these obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, constantly diluting shareholders, just to strengthen its balance sheet. 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 step in examining a company’s debt levels is to consider its cash flow and debt together.
Check out our latest review for BioLife Solutions
What is BioLife Solutions’ debt?
As you can see below, at the end of June 2021, BioLife Solutions was $ 11.3 million in debt, up from none a year ago. Click on the image for more details. However, his balance sheet shows that he holds $ 76.2 million in cash, so he actually has $ 64.9 million in net cash.
A look at the responsibilities of BioLife Solutions
Zooming in on the latest balance sheet data, we can see that BioLife Solutions had a liability of US $ 31.3 million due within 12 months and a liability of US $ 37.4 million beyond. In compensation for these obligations, he had cash of US $ 76.2 million as well as receivables valued at US $ 21.1 million maturing within 12 months. So he actually has $ 28.7 million Following liquid assets as total liabilities.
This fact indicates that BioLife Solutions’ balance sheet looks quite strong, as its total liabilities are roughly equal to its liquid assets. So while it’s hard to imagine the $ 1.62 billion company struggling to find the money, we still think it’s worth watching its balance sheet. In short, BioLife Solutions has a net cash flow, so it’s fair to say that it doesn’t have a lot of debt! The balance sheet is clearly the area you need to focus on when analyzing debt. But it is future profits, more than anything, that will determine BioLife Solutions’ ability to maintain a healthy balance sheet in the future. So, if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.
Over 12 months, BioLife Solutions achieved sales of US $ 74 million, a gain of 100%, although it reported no earnings before interest and taxes. So there is no doubt that shareholders are encouraging growth
So how risky are BioLife solutions?
Although BioLife Solutions recorded a loss of earnings before interest and taxes (EBIT) over the past twelve months, it achieved a statutory profit of US $ 3.9 million. So taking this at face value, and given the money, we don’t think it’s very risky in the short term. We believe that its 100% revenue growth is a good sign. There is no doubt that rapid growth in sales can cure all kinds of ailments, for one title. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks lie on the balance sheet – far from it. Know that BioLife Solutions shows 5 warning signs in our investment analysis , you must know…
If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash net growth stocks.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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