Balance sheet – Church Of God Anonymous http://churchofgodanonymous.org/ Wed, 23 Nov 2022 16:18:16 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://churchofgodanonymous.org/wp-content/uploads/2021/06/icon-2021-06-25T213907.443.png Balance sheet – Church Of God Anonymous http://churchofgodanonymous.org/ 32 32 AM Best revises outlook to negative for Al Fujairah National Insurance Company PJSC https://churchofgodanonymous.org/am-best-revises-outlook-to-negative-for-al-fujairah-national-insurance-company-pjsc/ Wed, 23 Nov 2022 15:40:00 +0000 https://churchofgodanonymous.org/am-best-revises-outlook-to-negative-for-al-fujairah-national-insurance-company-pjsc/ LONDON–(BUSINESS WIRE)–AM Best revised the outlook from stable to negative and affirmed the financial strength rating of B++ (good) and the long-term issuer credit rating of “bbb” (good) of Al Fujairah National Insurance Company PJSC (AFNIC) ) (United Arab Emirates). These credit ratings (ratings) reflect AFNIC’s balance sheet strength, which AM Best assesses as strong, […]]]>

LONDON–()–AM Best revised the outlook from stable to negative and affirmed the financial strength rating of B++ (good) and the long-term issuer credit rating of “bbb” (good) of Al Fujairah National Insurance Company PJSC (AFNIC) ) (United Arab Emirates).

These credit ratings (ratings) reflect AFNIC’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM) . The ratings also reflect the improved rating of AFNIC’s majority shareholder, the government of Fujairah, which directly owns more than 80% of AFNIC. The Fujairah government has demonstrated its capital support for AFNIC through past capital injections and has allowed capital accumulation in the company through free shares instead of cash distributions.

The outlook revision to negative reflects a deterioration in AFNIC’s operating results since 2021, which has put pressure on AM Best’s operating performance assessment to strong. Historically, AFNIC has a solid track record of technical and operational performance, illustrated by a five-year (2017-2021) weighted average combined ratio of 88.8% and a return on equity (ROE) ratio of 10.8 %. More recent performance has been below these historical averages, with AFNIC posting a combined ratio of 99.0% for 2021 (as calculated by AM Best), and year-to-date underwriting losses in 2022, resulting from the increase in claims associated with the reduction in earned premiums, resulting in pressure on expenses. While operational performance remained profitable for 2021 (5.7% ROE), the company recorded a net loss of AED 8.4 million for the first nine months of 2022.

The solidity of AFNIC’s balance sheet is based on a very good level of risk-adjusted capitalization, measured by the Best Capital Adequacy Ratio (BCAR). The company has demonstrated its ability to build equity over time through earnings retention and capitalization. An important factor that offsets the strength of AFNIC’s balance sheet stems from the company’s high-risk investment strategy. Invested assets are concentrated in equity securities (69% of total investments at the end of 2021) and real estate (17%), leaving the balance sheet highly exposed to fluctuations in fair value. In addition, AM Best believes that concentrations within the company’s equity portfolio to single strategic holdings increase investment risk.

AFNIC’s activities are focused on the competitive and highly fragmented UAE non-life insurance market, where it underwrites a small share of total market premiums. AFNIC recorded a contraction of 4% in gross written premiums in 2021 to AED 237.4 million, partly due to underwriting discipline and partly due to strong competition in its main automotive and medical portfolios. The company does, however, enjoy preferential access to government-sponsored companies in the Fujairah region.

AM Best views AFNIC’s ERM framework and capabilities as marginal given the size and complexity of its operations. AM Best considers ongoing ERM developments to be necessary to manage the risk profile of the business, especially for investment risk.

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the release and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limits of the credit score notice, please consult Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Does Holmen (STO:HOLM B) have a healthy balance sheet? https://churchofgodanonymous.org/does-holmen-stoholm-b-have-a-healthy-balance-sheet/ Mon, 21 Nov 2022 06:38:12 +0000 https://churchofgodanonymous.org/does-holmen-stoholm-b-have-a-healthy-balance-sheet/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. 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. Above all, Holmen AB (publisher) (STO:HOLM B) is in debt. But the real question is whether this debt makes the business risky.

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. 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 painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. 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. When we think about a company’s use of debt, we first look at cash and debt together.

See our latest analysis for Holmen

What is Holmen’s debt?

The image below, which you can click on for more details, shows that Holmen had debt of 3.95 billion kr at the end of September 2022, a reduction from 4.75 billion kr year on year. However, he also had 1.14 billion kr in cash, so his net debt is 2.81 billion kr.

OM:HOLM B Debt to Equity Historical November 21, 2022

A look at Holmen’s responsibilities

The latest balance sheet data shows that Holmen had liabilities of 7.02 billion kr due within one year, and liabilities of 17.2 billion kr falling due thereafter. On the other hand, it had a cash position of 1.14 billion kr and 12.8 billion kr of receivables due within one year. Thus, its liabilities total kr 10.2 billion more than the combination of its cash and short-term receivables.

Given that publicly traded Holmen shares are worth a total of 68.2 billion kr, it seems unlikely that this level of liability is a major threat. That said, it is clear that we must continue to monitor its record, lest it deteriorate.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). The advantage of this approach is that we consider both the absolute amount of debt (with net debt to EBITDA) and the actual interest expense associated with that debt (with its interest coverage ratio ).

Holmen’s net debt is only 0.38 times its EBITDA. And its EBIT easily covers its interest charges, being 75.5 times higher. One could therefore say that he is no more threatened by his debt than an elephant is by a mouse. What is even more impressive is that Holmen increased its EBIT by 124% year-over-year. This boost will make it even easier to pay off debt in the future. The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Holmen’s ability to maintain a healthy balance sheet in the future. So if you are focused on the future, you can check out this free report showing analyst earnings forecasts.

Finally, a company can only repay its debts with cold hard cash, not with book profits. So the logical step is to look at what proportion of that EBIT is actual free cash flow. Over the past three years, Holmen has produced strong free cash flow equivalent to 59% of its EBIT, which is what we expected. This free cash flow puts the company in a good position to repay its debt, should it arise.

Our point of view

Fortunately, Holmen’s impressive interest coverage means she has the upper hand on her debt. And this is only the beginning of good news since its EBIT growth rate is also very encouraging. Zooming out, Holmen seems to be using debt quite sensibly; and that gets the green light from us. Although debt carries risks, when used wisely, it can also generate a higher return on equity. 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, Holmen has 2 warning signs (and 1 which does not suit us too much) we think you should know.

Of course, if you are the type of investor who prefers to buy stocks without going into debt, do not hesitate to discover our exclusive list of net cash growth stockstoday.

Valuation is complex, but we help make it simple.

Find out if Holmen is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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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Does Barbara Bui (EPA:BUI) have a healthy balance sheet? https://churchofgodanonymous.org/does-barbara-bui-epabui-have-a-healthy-balance-sheet/ Fri, 18 Nov 2022 08:10:53 +0000 https://churchofgodanonymous.org/does-barbara-bui-epabui-have-a-healthy-balance-sheet/ 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”. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very […]]]>

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”. 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. We note that Barbara Bui SA (APE: BUI) has a debt on its balance sheet. But should shareholders worry about its use of debt?

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 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 think about a company’s use of debt, we first look at cash and debt together.

See our latest analysis for Barbara Bui

What is Barbara Bui’s net debt?

The image below, which you can click on for more details, shows that Barbara Bui had a debt of €2.31m at the end of June 2022, a reduction of €2.45m over one year. However, he also had €329.0k in cash, and his net debt is therefore €1.99m.

ENXTPA: BUI’s Debt to Equity History November 18, 2022

How healthy is Barbara Bui’s balance sheet?

We can see from the most recent balance sheet that Barbara Bui had liabilities of 4.86 million euros due in one year and liabilities of 5.90 million euros due beyond. In return for these bonds, it had cash of €329.0 thousand as well as receivables worth €1.06 million maturing in less than 12 months. It therefore has liabilities totaling 9.37 million euros more than its cash and short-term receivables, combined.

The deficiency here weighs heavily on the company itself of 4.16 million euros, like a child struggling under the weight of a huge backpack full of books, his sports equipment and a trumpet. We would therefore be watching his balance sheet closely, no doubt. After all, Barbara Bui would probably need a major recapitalization if she had to pay her creditors today. When analyzing debt levels, the balance sheet is the obvious starting point. But it is Barbara Bui’s income 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.

Over 12 months, Barbara Bui achieved a turnover of 10 million euros, a gain of 33%, although she did not declare any profit before interest and taxes. With a little luck, the company will be able to progress towards profitability.

Caveat Emptor

Even though Barbara Bui has managed to grow her top line quite skillfully, the hard truth is that she is losing money on the EBIT line. Indeed, it lost a very considerable €1.1 million in terms of EBIT. When we look at this alongside significant liabilities, we are not particularly confident in the business. It would have to quickly improve its functioning so that we are interested in it. Not least because he burned €1.3m of negative free cash flow over the past year. That means it’s on the risky side of things. 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 found 4 warning signs for Barbara Bui which you should be aware of before investing here.

Of course, if you are the type of investor who prefers to buy stocks without going into debt, do not hesitate to discover our exclusive list of net cash growth stockstoday.

Valuation is complex, but we help make it simple.

Find out if Barbara Bui is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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 Fodelia Oyj (HEL:FODELIA) is taking risks with its debt https://churchofgodanonymous.org/we-think-fodelia-oyj-helfodelia-is-taking-risks-with-its-debt/ Sat, 12 Nov 2022 08:01:33 +0000 https://churchofgodanonymous.org/we-think-fodelia-oyj-helfodelia-is-taking-risks-with-its-debt/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. 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. We note that Fodelia Oyj (HEL: FODELIA) has a debt on its balance sheet. But does this debt worry shareholders?

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. However, a more usual (but still expensive) situation is when a company has to dilute shareholders at a cheap share price just to keep debt under control. Of course, many companies use debt to finance their growth, without any negative consequences. When we look at debt levels, we first consider cash and debt levels, together.

Our analysis indicates that FODELIA is potentially undervalued!

What is Fodelia Oyj’s debt?

As you can see below, Fodelia Oyj had €12.2 million in debt, as of June 2022, roughly the same as the previous year. You can click on the graph for more details. And he doesn’t have a lot of cash, so his net debt is about the same.

HLSE: FODELIA Debt to Equity History November 12, 2022

How strong is Fodelia Oyj’s balance sheet?

According to the last published balance sheet, Fodelia Oyj had liabilities of €10.4 million maturing within 12 months and liabilities of €7.72 million maturing beyond 12 months. In compensation for these obligations, it had cash of €112.0 thousand as well as receivables worth €4.53 million maturing in less than 12 months. Its liabilities therefore total €13.5 million more than the combination of its cash and short-term receivables.

While that might sound like a lot, it’s not too bad since Fodelia Oyj has a market capitalization of €36.0 million, so it could probably bolster its balance sheet by raising capital if needed. But it is clear that it is essential to examine closely whether it can manage its debt without dilution.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

Fodelia Oyj’s debt is 4.0 times its EBITDA, and its EBIT covers its interest charges 5.1 times. This suggests that while debt levels are significant, we will refrain from labeling them as problematic. Fortunately, Fodelia Oyj is growing its EBIT faster than former Australian Prime Minister Bob Hawke dropped a yard glass, with a 120% gain over the last twelve months. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Fodelia Oyj can strengthen its balance sheet over time. So if you want to see what the pros think, you might find this free analyst earnings forecast report Be interesting.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Fodelia Oyj has burned a lot of money. While investors no doubt expect a reversal of this situation in due course, it clearly means that its use of debt is more risky.

Our point of view

Neither Fodelia Oyj’s ability to convert EBIT to free cash flow nor its net debt to EBITDA gave us confidence in its ability to take on more debt. But the good news is that it looks like it could easily increase its EBIT. Looking at all the angles discussed above, it seems to us that Fodelia Oyj is a bit of a risky investment due to its leverage. This isn’t necessarily a bad thing, since leverage can increase return on equity, but it is something to be aware of. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks reside on the balance sheet, far from it. To do this, you need to find out about the 4 warning signs we spotted with Fodelia Oyj (including 1 must-see) .

Of course, if you are the type of investor who prefers to buy stocks without going into debt, do not hesitate to discover our exclusive list of net cash growth stockstoday.

Valuation is complex, but we help make it simple.

Find out if Fodelia Oyj is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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 Kaleyra (NYSE:KLR) weighed down by her debt? https://churchofgodanonymous.org/is-kaleyra-nyseklr-weighed-down-by-her-debt/ Wed, 09 Nov 2022 11:44:20 +0000 https://churchofgodanonymous.org/is-kaleyra-nyseklr-weighed-down-by-her-debt/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest 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. We can […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest 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. We can see that Kaleyra, Inc. (NYSE: KLR) uses debt in his business. But does this debt worry shareholders?

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. In the worst case, a company 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, permanently diluting shareholders, just to shore up 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. When we think about a company’s use of debt, we first look at cash and debt together.

See our latest analysis for Kaleyra

What is Kaleyra’s net debt?

The image below, which you can click on for more details, shows Kaleyra had $220.8 million in debt at the end of September 2022, a reduction from $232.2 million year-over-year. However, he also had $87.2 million in cash, so his net debt is $133.7 million.

NYSE: KLR Debt to Equity History November 9, 2022

How healthy is Kaleyra’s balance sheet?

According to the last published balance sheet, Kaleyra had liabilities of $112.0 million due within 12 months and liabilities of $214.9 million due beyond 12 months. On the other hand, it had a cash position of 87.2 million dollars and 97.2 million dollars of receivables at less than one year. Thus, its liabilities outweigh the sum of its cash and receivables (current) by $142.5 million.

This deficit casts a shadow over the $27.5 million company, like a colossus towering above mere mortals. We would therefore be watching his balance sheet closely, no doubt. After all, Kaleyra would likely need a major recapitalization if she had to pay her creditors today. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether Kaleyra can strengthen its balance sheet over time. So if you want to see what the pros think, you might find this free analyst earnings forecast report Be interesting.

Last year, Kaleyra was not profitable on an EBIT level, but managed to increase its revenue by 51%, to $336 million. The shareholders probably have their fingers crossed that she can make a profit.

Caveat Emptor

While we can certainly appreciate Kaleyra’s revenue growth, her earnings before interest and tax (EBIT) loss is less than ideal. Indeed, it lost a very significant US$33 million in EBIT. Combining this information with the significant liabilities we have already discussed makes us very hesitant about this stock, to say the least. Of course, he may be able to improve his situation with a bit of luck and good execution. Still, we wouldn’t bet on it considering he’s vaporized $6.9 million in cash in the past twelve months and doesn’t have a lot of cash on hand. So we think this stock is risky, like walking through a dirty dog ​​park in a mask. 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. Example: we have identified 5 warning signs for Kaleyra you should be aware.

If you are interested in investing in companies 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.

Valuation is complex, but we help make it simple.

Find out if Kaleyra is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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 Kelsian Group (ASX:KLS) is using debt reasonably well https://churchofgodanonymous.org/these-4-metrics-indicate-kelsian-group-asxkls-is-using-debt-reasonably-well/ Sat, 05 Nov 2022 23:29:20 +0000 https://churchofgodanonymous.org/these-4-metrics-indicate-kelsian-group-asxkls-is-using-debt-reasonably-well/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to 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. […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to 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 Kelsian Group Limited (ASX: KLS) resorts to debt. 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. 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. 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.

Discover our latest analysis for Kelsian Group

How much debt does Kelsian Group have?

As you can see below, at the end of June 2022, Kelsian Group had A$364.4 million in debt, up from A$307.9 million a year ago. Click on the image for more details. On the other hand, he has A$141.1 million in cash, resulting in a net debt of around A$223.3 million.

ASX: KLS Debt to Equity History November 5, 2022

How healthy is Kelsian Group’s balance sheet?

According to the latest published balance sheet, the Kelsian Group had liabilities of A$341.4 million due within 12 months and liabilities of A$547.4 million due beyond 12 months. In return, he had A$141.1 million in cash and A$119.9 million in receivables due within 12 months. Thus, its liabilities outweigh the sum of its cash and (current) receivables of A$627.9 million.

Kelsian Group has a market capitalization of A$1.07 billion, so it could very likely raise funds to improve its balance sheet, should the need arise. But we definitely want to keep our eyes peeled for indications that its debt is too risky.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

Kelsian Group has net debt worth 1.6x EBITDA, which isn’t too much, but its interest coverage looks a little low, with EBIT at just 4.0x interest expense. interests. While these numbers don’t alarm us, it’s worth noting that the cost of corporate debt has a real impact. If Kelsian Group can continue to grow EBIT at last year’s rate of 15% over last year, then it will find its leverage more manageable. There is no doubt that we learn the most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Kelsian Group’s ability to maintain a healthy balance sheet in the future. So if you want to see what the pros think, you might find this free analyst earnings forecast report Be interesting.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. We therefore always check how much of this EBIT is converted into free cash flow. Fortunately for all shareholders, Kelsian Group has actually produced more free cash flow than EBIT for the past three years. There’s nothing better than incoming money to stay in the good books of your lenders.

Our point of view

Fortunately, Kelsian Group’s impressive EBIT to free cash flow conversion means it has the upper hand on its debt. But, on a darker note, we’re a bit concerned about its interest coverage. Looking at all of the aforementioned factors together, it seems to us that the Kelsian Group can manage its debt quite comfortably. Of course, while this leverage can improve return on equity, it comes with more risk, so it’s worth keeping an eye out for. 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 – Kelsian Group has 1 warning sign we think you should know.

Of course, if you are the type of investor who prefers to buy stocks without going into debt, do not hesitate to discover our exclusive list of net cash growth stockstoday.

Valuation is complex, but we help make it simple.

Find out if Kelsian group is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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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The Fed faces a double threat of recession and financial crisis as its fight against inflation increases the risks of both https://churchofgodanonymous.org/the-fed-faces-a-double-threat-of-recession-and-financial-crisis-as-its-fight-against-inflation-increases-the-risks-of-both/ Wed, 02 Nov 2022 23:12:15 +0000 https://churchofgodanonymous.org/the-fed-faces-a-double-threat-of-recession-and-financial-crisis-as-its-fight-against-inflation-increases-the-risks-of-both/ ]]>
Conjurer à la fois la récession et une crise financière peut prendre plus qu'un espoir et une prière.  <a href="https://www.gettyimages.com/detail/news-photo/federal-reserve-bank-board-chairman-jerome-powell-answers-news-photo/1438450972?phrase=JErome&adppopup=true" rel="nofollow noopener" cible="_Vide" data-ylk="slk:Chip Somodevilla/Getty Images" classe="lien ">Chip Somodevilla/Getty Images</a>” src=”https://s.yimg.com/ny/api/res/1.2/CrTW5vdThsCZhs.cll_vpQ–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTM5NQ–/https://media.zenfs.com/en/the_conversation_us_articles_815/2e9e6176c1512b4c05c”data “</div>
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<p>There are <a href=broad agreement among economists and market watchers that The aggressiveness of the Federal Reserve interest rate hikes will cause economic growth comes to a halt, causing a recession. We talk less about risk of financial crisis as the US central bank simultaneously attempts to shrink its massive balance sheet.

As expected, the Fed on November 2, 2022, increased borrowing costs by 0.75 percentage pointshis fourth consecutive hike of this sizebringing its benchmark rate to 4%.

At the same time as it raised rates, the Fed quietly reduced its balance sheet, which ballooned after the onset of the COVID-19 pandemic in 2020. It peaked at US$9 trillion in April 2022 and has since shrunk by about $240 billion, as the Fed reduced its holdings of Treasuries and other debt it bought to avoid an economic meltdown at the start of the pandemic.

Like a finance specialist, I have studied financial decisions and the markets for over a decade. I already see signs of distress that could snowball into a financial crisis, compounding the Fed’s woes as it struggles to contain soaring inflation.

Fed Balance Sheet Basics

As part of its mandate, the Federal Reserve maintains a balance sheet that includes securities, such as bonds, as well as other instruments that it uses to inject money into the economy and support financial institutions.

The balance sheet has grown significantly over the past two decades as the Fed began experimenting in 2008 with a policy known as quantitative easing – essentially, printing money – to buy debt to prop up markets. financials in turmoil. The Fed again significantly expanded its balance sheet in 2020 to provide support, or liquidity, banks and other financial institutions so that the financial system does not run out of liquidity. Liquidity refers to how efficiently a security can be converted into cash without affecting the price.

But in March 2022, the Fed shifted gears. It stopped buying new securities and began to reduce its debt holdings under a policy known as quantitative tightening. The current balance is $8.7 trillion, two-thirds of which are Treasury securities issued by the U.S. government.

The result is that there is one less buyer in the $24 trillion Treasury Market, one of the largest and most important markets in the world. And that means less cash.

Liquidity loss

Markets work best when there is plenty of liquidity. But when it dries, that’s when financial crises happen, investors having difficulty selling securities or other assets. This can lead to a sell-off of financial assets and a fall in prices.

Treasury markets have been exceptionally volatile this year, leading to the biggest losses in decades – as prices fall and yields rise. This is partly due to Fed rate hikes, but another factor is the sharp loss of liquidity as the central bank shrinks its balance sheet. A the drop in liquidity increases the risks for investors, which then demand higher returns for financial assets. This leads to lower prices.

The loss of liquidity not only adds further uncertainty to the markets, but could also destabilize financial markets. For example, the most recent round of quantitative tightening, in 2019, led to a crisis overnight lending marketswhich are used by banks and other financial institutions to lend money to each other for very short periods of time.

Given the sheer size of the Treasury market, the problems in it are likely to seep into virtually any other market in the world. This could start with money market funds, which are held as low-risk investments for individuals. Since these investments are considered risk-free, any possible risk has significant consequences – as happened in 2008 and 2020.

Other markets are also directly affected since the Fed holds more than Treasuries. It also holds mortgages, which means that shrinking its balance sheet could also hurt liquidity in this market. Quantitative tightening also decreases bank reserves in the financial system, which is another way in which financial stability could be threatened and increase the risk of crisis.

The last time the Fed tried to reduce its balance sheet, it caused this was known as a “tantrumas bond investors reacted by selling bonds, causing bond yields to rise sharply and forcing the central bank to reverse course. In summary, if the Fed continues to reduce its holdings, it could pile a financial crisis on top of a recession, which could lead to unforeseen problems for the US economy – and economies around the world.

A war on two fronts

For now, Fed Chairman Jerome Powell said he thinks the markets are managing its balance sheet. effectively. And on November 2, the Fed said it would continue to reduce its balance sheet – by about $1.1 trillion per year.

Obviously, not everyone agreesincluding the US Treasury, which said the lower liquidity increases government borrowing costs.

The risks of a major crisis will only grow as the US economy continues to slow due to rate hikes. While fighting inflation is tough enough, the Fed may soon have a two-pronged war on its hands.

This article is republished from The conversation, an independent non-profit news site dedicated to sharing ideas from academic experts. It was written by: D. Brian Blank, Mississippi State University. Like this article ? Subscribe to our weekly newsletter.

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D. Brian Blank does not work for, consult, own stock or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond his appointment university.

]]> Easy money is a thing of the past, but that’s not why stocks are in a bear market https://churchofgodanonymous.org/easy-money-is-a-thing-of-the-past-but-thats-not-why-stocks-are-in-a-bear-market/ Mon, 31 Oct 2022 12:09:14 +0000 https://churchofgodanonymous.org/easy-money-is-a-thing-of-the-past-but-thats-not-why-stocks-are-in-a-bear-market/
Don’t blame the shrinking US money supply for the bear market in equities. It’s not that liquidity has nothing to do with stock prices. It’s just that the relationship between them is too complex to be useful in a straightforward way as a market timing tool. It’s important to point this out because this year’s […]]]>

Don’t blame the shrinking US money supply for the bear market in equities. It’s not that liquidity has nothing to do with stock prices. It’s just that the relationship between them is too complex to be useful in a straightforward way as a market timing tool.

It’s important to point this out because this year’s experience leads many stock market experts and financial advisors to believe that there is a close correlation between the stock market and the country’s money supply. M2 money supply has fallen 2.7% in the past six months – the lowest six-month growth at least since 1981, when I was able to get weekly data. (M2 includes U.S. cash in circulation, checking deposits, savings deposits under $100,000, and money market mutual funds.)

The S&P 500 SPX,
+2.46%
has since suffered greatly. At its mid-October low, the U.S. market benchmark was down more than 25% from its peak in early January.

As compelling as this narrative is for explaining this year’s bear market, there have been many other past occasions when a shrinking money supply has not led to a bear market on Wall Street. In fact, there is little consistency in the relationship between the stock market and changes in the money supply. Sometimes a shrinkage led to good stock years, but other times not. The same was true for an expanding money supply.

I suspect that one of the sources of this unstable relationship is that the relationship depends on the attitude of investors towards inflation. When on high alert for signs of impending inflation, for example, increases in the M2 money supply are considered inauspicious. When investors are rather concerned about deflation, then they celebrate increases in the money supply.

Fed balance sheet reduction

Strong beliefs die hard, and one feedback I got from this analysis is that M2 is not the right liquidity metric to focus on. A better measurement some have suggested is the size of the Federal Reserve balance sheet.

As was the case with the money supply, there is strong circumstantial evidence to support this suggestion. The Fed’s balance sheet grew from less than $4 trillion to over $7 trillion in the immediate wake of the COVID-19 pandemic in the spring of 2020, and over the following 12 months the S&P 500 grew. almost doubled. Over the last six months of 2022, by contrast, the Fed’s balance sheet shrank 2.2% as Fed quantitative tightening took effect. Less than 10% of six-month growth rates over the past two decades were lower.

After a more systematic analysis of historical data, it becomes clear that the relationship between the stock market and the Fed’s balance sheet is just as unstable as it is with money supply M2. At times, the stock market has performed spectacularly in the wake of a rapidly expanding Fed balance sheet. The same could be said of a shrinking balance sheet. These results are summarized in the table below.

The broader lesson here is the importance of subjecting our beliefs to statistical scrutiny – regardless of the intuitive plausibility of those beliefs. It makes perfect sense that changes in liquidity lead to corresponding changes in the stock market. It turns out that this is not true in any simple or mechanical way that investors can use to beat the market.

Mark Hulbert is a regular MarketWatch contributor. His Hulbert Ratings tracks investment newsletters that pay a fixed fee to be audited. He can be reached at mark@hulbertratings.com

After: Tech stocks are falling – that’s how you’ll know when to buy them again

Read also : Municipal bond yields are attractive now – here’s how to determine if they’re right for you

]]> VSTECS Holdings (HKG:856) has a somewhat stretched balance sheet https://churchofgodanonymous.org/vstecs-holdings-hkg856-has-a-somewhat-stretched-balance-sheet/ Fri, 28 Oct 2022 23:51:27 +0000 https://churchofgodanonymous.org/vstecs-holdings-hkg856-has-a-somewhat-stretched-balance-sheet/
Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. 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 note that VSTEC Holdings Limited (CHF:856) has a debt on its balance sheet. But does this debt worry shareholders?

When is debt a problem?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, it exists at their mercy. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is when a company has to dilute shareholders at a cheap share price just to keep debt under control. That said, the most common situation is when a company manages its debt reasonably well – and to its own benefit. The first thing to do when considering how much debt a business has is to look at its cash and debt together.

Check opportunities and risks within Hong Kong’s electronics industry.

How much debt does VSTEC Holdings have?

You can click on the graph below for historical figures, but it shows that in June 2022, VSTECS Holdings had HK$8.38 billion in debt, an increase from HK$4.85 billion, over a year. However, he also had HK$4.38 billion in cash, so his net debt is HK$4.00 billion.

SEHK: 856 Debt to Equity History October 28, 2022

How healthy is VTECS Holdings’ balance sheet?

Zooming in on the latest balance sheet data, we can see that VSTECS Holdings had liabilities of HK$24.0 billion due within 12 months and liabilities of HK$1.66 billion due beyond. In return, it had HK$4.38 billion in cash and HK$17.1 billion in debt due within 12 months. It therefore has liabilities totaling HK$4.18 billion more than its cash and short-term receivables, combined.

That’s a mountain of leverage compared to its market capitalization of HK$5.36 billion. If its lenders asked it to shore up its balance sheet, shareholders would likely face significant dilution.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

With a net debt to EBITDA ratio of 2.5 VSTEC Holdings has a pretty notable amount of debt. But the high interest coverage of 9.7 suggests it can easily repay that debt. Unfortunately, VSTECS Holdings has seen its EBIT drop by 2.7% over the last twelve months. If this earnings trend continues, its leverage will become heavy like the heart of a polar bear looking at its only cub. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether VSTECS Holdings can strengthen its balance sheet over time. So if you want to see what the pros think, you might find this free analyst earnings forecast report Be interesting.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, VSTECS Holdings has produced strong free cash flow equivalent to 64% of its EBIT, which is what we expected. This free cash flow puts the company in a good position to repay its debt, should it arise.

Our point of view

While we have reservations about how easily VSTECS Holdings is able to control its total liabilities, its interest coverage and conversion of EBIT to free cash flow makes us think we feel relatively indifferent. Looking at all the angles mentioned above, it seems to us that VSTECS Holdings is a somewhat risky investment due to its debt. 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. Be aware that VSTECS Holdings shows 3 warning signs in our investment analysis and 2 of them don’t suit us too much…

If after all this you are more interested in a fast growing company with a strong balance sheet, then check out our list of net cash growth stocks without delay.

Valuation is complex, but we help make it simple.

Find out if VSTECS Holdings is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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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Here’s why Quaker Chemical (NYSE:KWR) has significant debt https://churchofgodanonymous.org/heres-why-quaker-chemical-nysekwr-has-significant-debt/ Wed, 26 Oct 2022 12:31:47 +0000 https://churchofgodanonymous.org/heres-why-quaker-chemical-nysekwr-has-significant-debt/ 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. We can see that Quaker Chemical Corporation (NYSE: KWR) uses debt in his business. But should shareholders worry […]]]>

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. We can see that Quaker Chemical Corporation (NYSE: KWR) uses debt in his business. But should shareholders worry about its use of debt?

Why is debt risky?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. 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.

Our analysis indicates that KWR is potentially overvalued!

What is Quaker Chemical’s net debt?

As you can see below, at the end of June 2022, Quaker Chemical had $986.9 million in debt, up from $898.6 million a year ago. Click on the image for more details. However, he also had $202.3 million in cash, so his net debt is $784.5 million.

NYSE: KWR Debt to Equity October 26, 2022

A Look at Quaker Chemical’s Responsibilities

The latest balance sheet data shows that Quaker Chemical had liabilities of $400.7 million due within one year, and liabilities of $1.24 billion due thereafter. In compensation for these obligations, it had cash of US$202.3 million as well as receivables valued at US$465.4 million and maturing within 12 months. It therefore has liabilities totaling $972.5 million more than its cash and short-term receivables, combined.

This shortfall isn’t that bad because Quaker Chemical is worth $2.76 billion and therefore could probably raise enough capital to shore up its balance sheet, should the need arise. But it is clear that it is essential to examine closely whether it can manage its debt without dilution.

We use two main ratios to inform us about debt to earnings levels. The first is net debt divided by earnings before interest, taxes, depreciation and amortization (EBITDA), while the second is how often its earnings before interest and taxes (EBIT) covers its interest expense (or its interests, for short). The advantage of this approach is that we consider both the absolute amount of debt (with net debt to EBITDA) and the actual interest expense associated with that debt (with its interest coverage ratio ).

Quaker Chemical’s debt is 3.4 times its EBITDA, and its EBIT covers its interest expense 6.4 times. Taken together, this implies that, while we wouldn’t like to see debt levels increase, we think he can manage his current leverage. Importantly, Quaker Chemical’s EBIT has fallen 21% over the last twelve months. If this decline continues, it will be more difficult to repay debts than to sell foie gras at a vegan convention. 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 Quaker Chemical can strengthen its balance sheet over time. So if you want to see what the pros think, you might find this free analyst earnings forecast report Be interesting.

Finally, while the taxman may love accounting profits, lenders only accept cash. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Quaker Chemical’s free cash flow has been 50% of its EBIT, less than we expected. It’s not great when it comes to paying off debt.

Our point of view

Reflecting on Quaker Chemical’s attempt to (not) increase EBIT, we are certainly not enthusiastic. But on the bright side, its interest coverage is a good sign and makes us more optimistic. Once we consider all of the above factors together, it seems to us that Quaker Chemical’s debt makes it a bit risky. Some people like that kind of risk, but we’re aware of the potential pitfalls, so we’d probably prefer it to take on less debt. 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, we have identified 4 warning signs for Quaker Chemical (1 is a little worrying) you should be aware.

If after all this you are more interested in a fast growing company with a strong balance sheet, then check out our list of net cash growth stocks without delay.

Valuation is complex, but we help make it simple.

Find out if chemical quaker is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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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