Balance sheet – Church Of God Anonymous http://churchofgodanonymous.org/ Fri, 24 Jun 2022 03:29:42 +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 Does HealthCare Global Enterprises (NSE:HCG) have a healthy track record? https://churchofgodanonymous.org/does-healthcare-global-enterprises-nsehcg-have-a-healthy-track-record/ Fri, 24 Jun 2022 01:23:11 +0000 https://churchofgodanonymous.org/does-healthcare-global-enterprises-nsehcg-have-a-healthy-track-record/ 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.” 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 HealthCare […]]]>

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.” 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 HealthCare Global Enterprises Limited (NSE:HCG) uses debt in its business. But the more important question is: what risk does this debt create?

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. 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. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Check out our latest analysis for HealthCare Global Enterprises

How much debt does HealthCare Global Enterprises have?

You can click on the graph below for historical figures, but it shows that HealthCare Global Enterprises had ₹4.08 billion in debt in March 2022, up from ₹4.47 billion a year prior. However, he has ₹2.32 billion in cash to offset this, resulting in a net debt of around ₹1.76 billion.

NSEI:HCG Debt to Equity June 24, 2022

How healthy is HealthCare Global Enterprises’ balance sheet?

According to the latest published balance sheet, HealthCare Global Enterprises had liabilities of ₹4.70 billion due within 12 months and liabilities of ₹8.66 billion due beyond 12 months. As compensation for these obligations, it had cash of ₹2.32 billion as well as receivables valued at ₹2.19 billion due within 12 months. Thus, its liabilities outweigh the sum of its cash and (short-term) receivables of ₹8.85 billion.

This shortfall is not that bad as HealthCare Global Enterprises is worth ₹40.4 billion and therefore could probably raise enough capital to shore up its balance sheet, should the need arise. However, it is always worth taking a close look at its ability to repay debt.

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 ).

HealthCare Global Enterprises has a very low debt to EBITDA ratio of 0.74, so it’s odd to see low interest coverage, with last year’s EBIT being only 0.82 times interest expense . So, one way or another, it is clear that debt levels are not negligible. We also note that HealthCare Global Enterprises improved its EBIT from last year’s loss to a positive result of ₹797 million. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether HealthCare Global Enterprises 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 company can only repay its debts with cold hard cash, not with book profits. It is therefore worth checking how much of earnings before interest and tax (EBIT) is supported by free cash flow. Fortunately for all shareholders, HealthCare Global Enterprises has actually produced more free cash flow than EBIT over the past year. There’s nothing better than incoming money to stay in the good books of your lenders.

Our point of view

The good news is that HealthCare Global Enterprises’ demonstrated ability to convert EBIT to free cash flow delights us like a fluffy puppy does a toddler. But the harsh truth is that we are concerned about his coverage of interests. We also note that healthcare companies such as HealthCare Global Enterprises generally use debt without issue. All told, it looks like HealthCare Global Enterprises can comfortably manage its current level of debt. 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. However, not all investment risks reside on the balance sheet, far from it. To this end, you should be aware of the 2 warning signs we spotted with HealthCare Global Enterprises.

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.

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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German human resources startup Personio raises $200 million https://churchofgodanonymous.org/german-human-resources-startup-personio-raises-200-million/ Tue, 21 Jun 2022 22:52:18 +0000 https://churchofgodanonymous.org/german-human-resources-startup-personio-raises-200-million/ Personio CEO Hanno Renner said investors are now focusing on company fundamentals rather than growth after raising another $200 million. Nobody While many startups struggle to raise additional funds or cut spending, some investors are looking to double down on previous bets. San Fransisco-based venture fund Greenoaks Capital led a new $200 million seed round […]]]>

While many startups struggle to raise additional funds or cut spending, some investors are looking to double down on previous bets. San Fransisco-based venture fund Greenoaks Capital led a new $200 million seed round for HR startup Personio, valuing the company at $8.5 billion.

The unusual preventative investment extends Personio’s $270 million funding round, which builds HR software for European small businesses, raised in October. The deal also signals that multiples for fast-growing startups like Munich-based Personio, which has doubled its revenue since its last round, have eased with public markets. Other European unicorns like Klarna are would have seeking new funding at a third of the $46 billion valuation reached last year.

Personio co-founder and chief executive Hanno Renner said the new funds weren’t necessary, but “piling” cash on the company’s balance sheet would support its growth over the next two to three years. years, as well as new acquisitions. The startup has acquired Returna Berlin-based company that automates common employee questions about time off and payroll, in May.

“We felt that now was the right time with all that was happening to support our balance sheet and to be able to continue to make smart investments over the coming years and be able to make the right decisions for the business. “, says Renner.

Personio charges European small businesses around $190 per month to help automate routine HR tasks like tracking hires, payroll, and performance reviews. That recurring revenue from the six-year-old startup’s 6,000 clients has played a bigger role in conversations with investors since the war in Ukraine sparked a strong sell-off in public markets, and in particular tech stocks, says Renner. .

“What’s really changed there is a lot more focus on fundamentals like sales, sustainability and business efficiency,” says Renner. “We’ve always been strong on that, but people haven’t cared as much about it over the last two years and have always cared about growth.”

Renner says he plans to keep Personio as a private company for the foreseeable future and could make the startup profitable by slowing investment. “We could, if the funding completely ran out, be profitable without major cutbacks simply by not increasing our costs or our headcount,” he says.

The $200 million investment makes Personio one of Germany’s most valuable companies behind process mining software startup Celonis and digital bank N26. “We believe Personio is among the best SaaS companies in the world, with rapid growth, a sustainable business model and exceptional leadership,” says Neil Mehta, founder and managing partner of Greenoaks Capital, who also led the October round. .

Mehta earned a spot on Midas’ list of top tech investors in 2022 thanks to his early backing of South Korean e-commerce giant Coupang and his investments in Stripe, Checkout.com and Robinhood.

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The Fed faces tougher challenges ahead https://churchofgodanonymous.org/the-fed-faces-tougher-challenges-ahead/ Mon, 20 Jun 2022 07:11:33 +0000 https://churchofgodanonymous.org/the-fed-faces-tougher-challenges-ahead/ On June 15, the Federal Reserve announced the results of its latest monetary policy meeting, approving a 75 basis point interest rate hike, the largest one-time increase in nearly three decades. At the press conference, Fed Chairman Jerome Powell said inflation had risen unexpectedly since the May meeting. In response, the Fed decided to raise […]]]>

On June 15, the Federal Reserve announced the results of its latest monetary policy meeting, approving a 75 basis point interest rate hike, the largest one-time increase in nearly three decades. At the press conference, Fed Chairman Jerome Powell said inflation had risen unexpectedly since the May meeting. In response, the Fed decided to raise interest rates sharply. The next meeting should be 50 basis points or 75 basis points, and the decision to raise rates by 75 basis points should not become the norm. According to the decision of the last meeting, the Fed began reducing its balance sheet from June 1 and planned to reduce its asset holdings by $47.5 billion each month, which would drop to $95 billion after three months. . The market had already anticipated that the Fed might proceed with aggressive interest rate hikes, and that is exactly what happened, showing its determination to curb inflation in the short term. For this reason, some analysts believe this will help restore market confidence in US monetary policy. However, many are worried about whether the United States will drag the global economy into a recessionary quagmire due to the aggressive tightening policy, adding to the increasingly pessimistic global economic outlook.

ANBOUND researchers are of the view that the Fed’s unconventional tightening policy aims to resolve its post-pandemic easing policy and make up for last year’s policy mistakes where it claimed inflation was ” transient”. At the same time, in the context of the “politicization” of the inflation issue, his intention is to coordinate with the “midterm elections” of the Biden administration, in order to avoid that the Democratic Party lose votes due to uncontrollable inflation. . Controlling inflation has become the Fed’s primary policy objective right now, even as the economy cools. If the Fed has made a choice between controlling inflation and maintaining growth, this does not mean that the contradiction will disappear. Instead, it will bounce back like a seesaw, and the future will face more serious challenges.

Powell said the next meeting should be 50 or 75 basis points, and 75 basis points of interest rate hikes should not become the norm. The pace of rate hikes will depend on future data. The federal funds rate is expected to be raised above 2.0% and below 3.0% by the end of summer 2022. It is hoped that by the end of 2022, federal funds rates interest may be increased to a restrictive level of 3.0% to 3.5%. The dot chart shows that Fed officials expect the benchmark rate to rise to 3.4% by the end of this year and 3.8% by the end of 2023. In line with this unexpected rate hike, the Fed has already started reducing its balance sheet in June. This “double tightening” policy will not only impact US and global capital markets, but will also inevitably affect US economic demand. Regarding the risk of a recession in the United States, Powell believes that after a slight decline in the first quarter, overall economic activity seems to have recovered and that demand from the economy is still in full swing. . He said that the Fed will not try to cause a recession in the United States at this time and that the US economy is well prepared for the FOMC to raise interest rates, adding that real GDP growth is slowing down. is accelerated in the second trimester. He noted that there is no progress on lowering inflation, although the Fed would like to see signs of that. Powell also said that wages are not responsible for the current high inflation in the United States and that there is no wage-price spiral.

Powell remains confident in the US economy. Indeed, judging by employment and other data, US economic growth remains healthy. However, the US capital market has started to show signs of adjustment. Not only did US equities decline, but the bond market also fluctuated, leading to a sharp rise in government bond yields with benchmark significance. At the same time, the real estate market, which performed well after the pandemic, will also be affected by the sharp rise in interest rates, and there are signs of “topping”. These economic and financial changes, along with falling consumer demand caused by high inflation, mean that the outlook for the US economy is not as rosy as Powell had painted it. Rising interest rates and shrinking the balance sheet too quickly will inevitably have a significant inhibiting effect on the US economy. Even if economic growth does not fall into recession, it will decline with falling inflation, which will intensify contradictions such as debt, investment and distribution.

At the same time, Powell mentioned that the Fed will carefully study why US inflation is “stubbornly high”, indicating that the Fed’s aggressive interest rate hike policy may have limited effect on containing the economy. short-term inflation. Deep-rooted inflation has both demand and supply-side structural factors, meaning that after the level of inflation declines, it will remain above the Fed’s 2% target for some time. Therefore, as the Fed’s roadmap shows, the pace of rate hikes won’t stop anytime soon, and could continue to increase until the midterm elections. and the downward trend in the economy, the dilemma facing the Fed going forward has become more important.

The Fed’s monetary policy “overshoot” will not only have a huge impact on the US economy, but will also drag global central banks into monetary policy tightening, which is sure to hurt the global economy. . Some media reported that at least 60 central banks around the world took tightening measures before the Fed or followed it during the year, while some also adopted several rounds of interest rate hikes. . Many economists have warned that the recent wave of rate hikes is just the start of a global tightening cycle. In Europe, Japan and others, global financial conditions will need to tighten further in order to reanchor inflation expectations. ANBOUND researchers pointed out that pending policy tightening from global central banks, economic growth will decline along with a decline in inflation from a high level, and a new coexistence equilibrium. of weak growth and moderate inflation is likely to occur. It should be noted that the current global economic, trade, financial and monetary environment is undergoing drastic changes and it would be difficult for future development to return to the “normal” pre-pandemic pattern, which will exacerbate the tendency to the global economic crisis. fragmentation.

Conclusion of the final analysis

The Federal Reserve’s tightening policy means that it has made a “politicized” choice between controlling inflation and maintaining growth. This will inevitably affect the United States and the global economy. This means that there will be more significant contradictions in the future. Thus, a change of government in the United States cannot be ruled out due to the failure of sharp interest rate hikes.

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These 4 measures indicate that Tetra Tech (NASDAQ:TTEK) is using debt safely https://churchofgodanonymous.org/these-4-measures-indicate-that-tetra-tech-nasdaqttek-is-using-debt-safely/ Sat, 18 Jun 2022 14:47:58 +0000 https://churchofgodanonymous.org/these-4-measures-indicate-that-tetra-tech-nasdaqttek-is-using-debt-safely/ 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 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. […]]]>

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 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, Tetra Tech, Inc. (NASDAQ: TTEK) is in debt. But should shareholders worry about its use of debt?

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. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we look at debt levels, we first consider cash and debt levels, together.

Check out our latest analysis for Tetra Tech

What is Tetra Tech’s debt?

You can click on the chart below for historical numbers, but it shows Tetra Tech had $251.8 million in debt in April 2022, up from $279.3 million a year prior. However, he also had $194.4 million in cash, so his net debt is $57.4 million.

NasdaqGS: TTEK Debt to Equity History June 18, 2022

A look at Tetra Tech’s responsibilities

The latest balance sheet data shows Tetra Tech had liabilities of $855.2 million due within the year, and liabilities of $545.8 million due thereafter. On the other hand, it had liquid assets of 194.4 million dollars and 786.6 million dollars of receivables within one year. Thus, its liabilities total $420.0 million more than the combination of its cash and short-term receivables.

Given that Tetra Tech has a market capitalization of US$6.41 billion, it’s hard to believe that these liabilities pose a big threat. That said, it is clear that we must continue to monitor its record, lest it deteriorate. Carrying virtually no net debt, Tetra Tech has indeed a very light indebtedness.

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). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Tetra Tech’s net debt is only 0.17 times its EBITDA. And its EBIT covers its interest charges 26.0 times. One could therefore say that he is no more threatened by his debt than an elephant is by a mouse. Another good thing is that Tetra Tech has increased its EBIT by 20% over the past year, further increasing its ability to manage debt. The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Tetra Tech’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 forecast.

But our last consideration is also important, because a company cannot pay off its debts with paper profits; he needs cash. We must therefore clearly examine whether this EBIT generates a corresponding free cash flow. Over the past three years, Tetra Tech has actually produced more free cash flow than EBIT. This kind of high cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Our point of view

The good news is that Tetra Tech’s demonstrated ability to cover its interest costs with its EBIT delights us like a fluffy puppy does a toddler. And this is only the beginning of good news since its conversion of EBIT into free cash flow is also very pleasing. Given this range of factors, we believe that Tetra Tech is fairly cautious with its leverage, and the risks appear well contained. The balance sheet therefore seems rather healthy to us. 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. For example, we found 2 warning signs for Tetra Tech which you should be aware of before investing here.

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.

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 C Cheng Holdings (HKG:1486) have a healthy balance sheet? https://churchofgodanonymous.org/does-c-cheng-holdings-hkg1486-have-a-healthy-balance-sheet/ Thu, 16 Jun 2022 22:20:17 +0000 https://churchofgodanonymous.org/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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Card Factory (LON:CARD) has a somewhat strained balance sheet https://churchofgodanonymous.org/card-factory-loncard-has-a-somewhat-strained-balance-sheet/ Wed, 15 Jun 2022 06:29:18 +0000 https://churchofgodanonymous.org/card-factory-loncard-has-a-somewhat-strained-balance-sheet/ Warren Buffett said: “Volatility is far from synonymous with risk. 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 plc card factory (LON:CARD) uses debt in its business. But should shareholders worry about its use of debt? When […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. 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 plc card factory (LON:CARD) uses debt in its business. But should shareholders worry about its use of debt?

When is debt a problem?

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. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth 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 Card Factory

What is Card Factory’s net debt?

As you can see below, Card Factory had a debt of £111.0m in January 2022, up from £120.3m the previous year. However, he also had £38.5m in cash, so his net debt is £72.5m.

LSE:CARD Debt to Equity June 15, 2022

How healthy is Card Factory’s balance sheet?

We can see from the most recent balance sheet that Card Factory had liabilities of £152.2m due within a year, and liabilities of £164.2m due beyond. As compensation for these obligations, it had cash of £38.5 million as well as receivables valued at £3.00 million maturing within 12 months. It therefore has liabilities totaling £274.9 million more than its cash and short-term receivables, combined.

Given that this deficit is actually greater than the company’s market capitalization of £193.4m, we think shareholders really should be watching Card Factory’s debt levels, like a parent watching their child do cycling for the first time. In theory, extremely large dilution would be required if the company were forced to repay its debts by raising capital at the current share price.

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). Thus, we consider debt to earnings with and without amortization and depreciation expense.

While Card Factory has a fairly reasonable net debt to EBITDA ratio of 1.9, its interest coverage looks low at 1.5. This suggests that the company is paying quite high interest rates. Regardless, there is no doubt that the stock uses significant leverage. We also note that Card Factory improved its EBIT from last year’s loss to a positive result of £30m. The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Card Factory’s 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.

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 earnings before interest and tax (EBIT) is supported by free cash flow. Fortunately for all shareholders, Card Factory has actually produced more free cash flow than EBIT over the past year. This kind of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Our point of view

At first glance, Card Factory’s level of total liabilities left us wondering about the stock, and its interest coverage was no more enticing than the single empty restaurant on the busiest night of the year. But on the bright side, its conversion from EBIT to free cash flow is a good sign and makes us more optimistic. Looking at the balance sheet and taking all of these factors into account, we think the debt makes Card Factory shares a bit risky. This isn’t necessarily a bad thing, but we would generally feel more comfortable with less leverage. Given our hesitation on the stock, it would be nice to know if any Card Factory insiders have been selling shares recently. You click here to find out if insiders have sold recently.

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

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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Apple is starting to walk and talk like a bank. Could he become one? https://churchofgodanonymous.org/apple-is-starting-to-walk-and-talk-like-a-bank-could-he-become-one/ Mon, 13 Jun 2022 14:16:18 +0000 https://churchofgodanonymous.org/apple-is-starting-to-walk-and-talk-like-a-bank-could-he-become-one/ Apple (AAPL -2.62%) appeared to surprise the market when it recently announced plans to offer a buy now, pay later (BNPL) offer in its wallet app, a new step into the financial services space for the consumer tech giant . Many have long feared that tech giants like Apple will one day become banks and […]]]>

Apple (AAPL -2.62%) appeared to surprise the market when it recently announced plans to offer a buy now, pay later (BNPL) offer in its wallet app, a new step into the financial services space for the consumer tech giant . Many have long feared that tech giants like Apple will one day become banks and offer traditional financial services because of their superior technology and customer acquisition capabilities. As Apple continues to walk and talk more like a bank, could the company ever get a banking charter and become one?

The BNPL offer

Customers who use Apple’s Wallet app to purchase items will have the option of forfeiting cash and refunding the purchase in installments at no additional cost or interest. The buy now, pay later payment format has become very popular among consumers and has also helped merchants to increase their sales.

Image source: Getty Images.

For starters, it will be a challenge for others in the BNPL space because of how well the offer is integrated. But Apple also plans to fund loans from its own balance sheet and make loan underwriting decisions through its own subsidiary, called Apple Financing. Typically, many consumer tech companies look to partner banks to help set up this kind of infrastructure, which is why this announcement has generated so much interest.

Apple is still in partnership with MasterCard to help it set up its BNPL offer. Mastercard offers a white label product and always communicates with suppliers to make the process possible. Goldman Sachs is the issuer of Apple’s credit card. Apple Financing has also apparently obtained all necessary state licenses to issue the BNPL loans.

Obtain a bank charter

Although it is very rare for a large technology company to obtain a banking charter, a large payments and technology company To block succeeded in obtaining an industrial bank charter after a very long process. An industrial bank charter is for a state-chartered bank with insurance from the Federal Deposit Insurance Corp. (FDIC), but it is somewhat more limited in nature.

So, while Apple might try to pursue a banking charter, I doubt that’s the case, given the length of the process and the pushback it might receive from the banking industry and other regulators due to antitrust concerns. With more than 1.8 billion active iPhones, if Apple ever pursues a charter and gets more involved in traditional banking, there could be data privacy concerns.

A recent example that comes to mind is Metaplatforms‘ foray into stablecoins, which are digital assets pegged to a commodity or fiat currency. Meta for years spent time and resources building a US dollar-backed stablecoin called Diem, but continued to run into regulatory issues. The company tried to partner with an issuing bank for the token, but eventually ended up selling the project. Many assume that regulatory issues were the main reason for the sale.

Finally, keep in mind that banking is a very heavily regulated industry, with most banks having three regulators. Even Block, with its industrial charter, is still regulated by the FDIC and the Utah Department of Financial Institutions. And then, once a company is a bank, it has to raise and hold regulatory capital, which doesn’t always excite investors so much.

Will this ever happen?

I find it unlikely that Apple will ever pursue a bank charter due to denial from regulators, the lengthy application process, and the need to hold regulatory capital. But maybe after setting up and managing some of its banking infrastructure, Apple will take more interest in it, especially if it sees serious profit potential. But even without getting a charter, Apple bringing its loan underwriting under its roof will give the company more data about its consumers’ finances, which could encourage Apple to offer even more financial services to the world. coming.

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These 4 metrics indicate that Ingredion (NYSE:INGR) is using debt reasonably well https://churchofgodanonymous.org/these-4-metrics-indicate-that-ingredion-nyseingr-is-using-debt-reasonably-well/ Sat, 11 Jun 2022 15:08:12 +0000 https://churchofgodanonymous.org/these-4-metrics-indicate-that-ingredion-nyseingr-is-using-debt-reasonably-well/ 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 can see that Ingredion Incorporated (NYSE:INGR) uses debt in its operations. But the real question is whether this debt makes the business risky.

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. 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. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we look at debt levels, we first consider cash and debt levels, together.

See our latest analysis for Ingredion

What is Ingredion’s net debt?

As you can see below, Ingredion had $2.25 billion in debt as of March 2022, roughly the same as the previous year. You can click on the graph for more details. However, since it has a cash reserve of $329.0 million, its net debt is lower, at around $1.92 billion.

NYSE:INGR Debt to Equity June 11, 2022

A look at Ingredion’s responsibilities

According to the last published balance sheet, Ingredion had liabilities of $1.72 billion maturing within 12 months and liabilities of $2.33 billion maturing beyond 12 months. In return, it had $329.0 million in cash and $1.27 billion in receivables due within 12 months. Thus, its liabilities outweigh the sum of its cash and (current) receivables by $2.46 billion.

While that might sound like a lot, it’s not too bad since Ingredion has a market capitalization of $5.95 billion, so it could probably bolster its balance sheet by raising capital if needed. However, it is always worth taking a close look at its ability to repay debt.

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 ).

With a debt to EBITDA ratio of 2.1, Ingredion uses debt wisely but responsibly. And the fact that its trailing twelve months EBIT was 8.9 times its interest expense aligns with that theme. Ingredion has increased its EBIT by 3.2% over the past year. It’s far from amazing, but it’s a good thing when it comes to paying down debt. The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Ingredion’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 forecast.

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 last three years, Ingredion has recorded a free cash flow of 41% of its EBIT, which is lower than expected. This low cash conversion makes debt management more difficult.

Our point of view

Based on our analysis, Ingredion’s interest coverage should signal that it won’t have too many problems with its debt. But the other factors we noted above weren’t so encouraging. For example, his level of total liabilities makes us a little nervous about his debt. When we consider all the factors mentioned above, we feel a bit cautious about Ingredion’s use of debt. While we understand that debt can improve returns on equity, we suggest shareholders keep a close eye on their level of debt, lest it increase. When analyzing debt levels, the balance sheet is the obvious starting point. But at the end of the day, every business can contain risks that exist outside of the balance sheet. Know that Ingredion shows 2 warning signs in our investment analysis and 1 of them cannot be ignored…

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

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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PMB Technology Berhad (KLSE:PMBTECH) seems to be using debt quite wisely https://churchofgodanonymous.org/pmb-technology-berhad-klsepmbtech-seems-to-be-using-debt-quite-wisely/ Thu, 09 Jun 2022 23:07:47 +0000 https://churchofgodanonymous.org/pmb-technology-berhad-klsepmbtech-seems-to-be-using-debt-quite-wisely/ 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”. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness […]]]>

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”. 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 PMB Berhad Technology (KLSE:PMBTECH) has debt on its balance sheet. But should shareholders worry about its use of debt?

When is debt a problem?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own 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 step when considering a company’s debt levels is to consider its cash and debt together.

Check out our latest analysis for PMB Technology Berhad

What is PMB Technology Berhad’s debt?

The image below, which you can click on for more details, shows that as of March 2022, PMB Technology Berhad had a debt of RM556.9 million, up from RM522.3 million in one year. However, he has RM104.1 million in cash to offset this, resulting in a net debt of around RM452.9 million.

KLSE: PMBTECH Debt to Equity History June 9, 2022

How strong is PMB Technology Berhad’s balance sheet?

Zooming in on the latest balance sheet data, we can see that PMB Technology Berhad had liabilities of RM495.6 million due within 12 months and liabilities of RM276.2 million due beyond. In return, he had RM104.1 million in cash and RM232.1 million in receivables due within 12 months. Thus, its liabilities total RM435.7 million more than the combination of its cash and short-term receivables.

Given that publicly traded PMB Technology Berhad shares are worth a total of RM3.47 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.

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.

PMB Technology Berhad has a low net debt to EBITDA ratio of just 1.5. And its EBIT covers its interest charges 14.4 times. So we’re pretty relaxed about his super-conservative use of debt. What is even more impressive is that PMB Technology Berhad increased its EBIT by 517% year-over-year. If sustained, this growth will make debt even more manageable in years to come. When analyzing debt levels, the balance sheet is the obvious starting point. But you can’t look at debt in total isolation; since PMB Technology Berhad will need revenue to repay this debt. So, if you want to know more about its earnings, it may be worth checking out this graph of its long-term trend.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. So the logical step is to look at what proportion of that EBIT is actual free cash flow. Over the past three years, PMB Technology Berhad has burned a lot of money. While investors no doubt expect a reversal of this situation in due course, this clearly means that its use of debt is more risky.

Our point of view

PMB Technology Berhad’s interest coverage suggests he can manage his debt as easily as Cristiano Ronaldo could score a goal against an Under-14 keeper. But the harsh truth is that we are concerned about its conversion from EBIT to free cash flow. All in all, it looks like PMB Technology Berhad can comfortably manage its current level of debt. On the plus side, this leverage can increase shareholder returns, but the potential downside is more risk of loss, so it’s worth keeping an eye on the balance sheet. 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. Know that PMB Technology Berhad presents 3 warning signs in our investment analysis and 1 of them is a little unpleasant…

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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Is Kim Hin Industry Berhad (KLSE:KIMHIN) weighed down by its debt? https://churchofgodanonymous.org/is-kim-hin-industry-berhad-klsekimhin-weighed-down-by-its-debt/ Tue, 07 Jun 2022 23:11:24 +0000 https://churchofgodanonymous.org/is-kim-hin-industry-berhad-klsekimhin-weighed-down-by-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 may be obvious that you need to take debt into account when thinking about the risk of a given stock, […]]]>

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 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 can see that Kim Hin Industry Berhad (KLSE: KIMHIN) uses debt in his business. But the real question is whether this debt makes the business risky.

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

See our latest analysis for Kim Hin Industry Berhad

What is Kim Hin Industry Berhad’s net debt?

As you can see below, at the end of March 2022, Kim Hin Industry Berhad had a debt of RM22.9 million, compared to RM22.0 million a year ago. Click on the image for more details. However, his balance sheet shows that he holds RM46.3 million in cash, so he actually has net cash of RM23.4 million.

KLSE: KIMHIN Debt to Equity June 7, 2022

A look at the responsibilities of Kim Hin Industry Berhad

According to the latest published balance sheet, Kim Hin Industry Berhad had liabilities of RM107.8 million due within 12 months and liabilities of RM46.8 million due beyond 12 months. On the other hand, it had liquid assets of RM46.3 million and RM67.3 million of receivables due within the year. Thus, its liabilities total RM41.0 million more than the combination of its cash and short-term receivables.

While that may sound like a lot, it’s not that bad since Kim Hin Industry Berhad has a market capitalization of RM105.2 million, so it could likely bolster its balance sheet by raising capital if needed. But we definitely want to keep our eyes peeled for indications that its debt is too risky. Despite its notable liabilities, Kim Hin Industry Berhad has a net cash position, so it’s fair to say that it doesn’t have a lot of debt! The balance sheet is clearly the area to focus on when analyzing debt. But it is the profits of Kim Hin Industry Berhad 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, Kim Hin Industry Berhad recorded a loss in EBIT and saw its revenue drop to RM339 million, a decline of 4.4%. We would much rather see growth.

So how risky is Kim Hin Industry Berhad?

We have no doubt that loss-making companies are, in general, more risky than profitable companies. And the fact is that over the past twelve months, Kim Hin Industry Berhad has been losing money in earnings before interest and taxes (EBIT). And during the same period, it recorded a negative free cash outflow of RM23 million and recorded a book loss of RM39 million. With just RM23.4m on the balance sheet, it looks like he will soon have to raise capital again. Overall, we would say the stock is a bit risky and we are generally very cautious until we see positive free cash flow. 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. For example, Kim Hin Industry Berhad has 3 warning signs (and 2 that make us uncomfortable) that we think you should know about.

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

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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