If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet. Every company has them, and we've spotted 4 warning signs for Fission Uranium (of which 1 doesn't sit too well with us!) you should know about. But ultimately, every company can contain risks that exist outside of the balance sheet. The balance sheet is clearly the area to focus on when you are analysing debt. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. Given it only has net cash of CA$48.7m, the company may need to raise more capital if it doesn't reach break-even soon. Indeed, in that time it burnt through CA$13m of cash and made a loss of CA$11m. And we do note that Fission Uranium had an earnings before interest and tax (EBIT) loss, over the last year. We have no doubt that loss making companies are, in general, riskier than profitable ones. Given its lack of meaningful operating revenue, Fission Uranium shareholders no doubt hope it can fund itself until it can sell some combustibles. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting. But it is future earnings, more than anything, that will determine Fission Uranium's ability to maintain a healthy balance sheet going forward. Succinctly put, Fission Uranium boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. This surplus suggests that Fission Uranium has a conservative balance sheet, and could probably eliminate its debt without much difficulty. So it can boast CA$44.3m more liquid assets than total liabilities. Offsetting these obligations, it had cash of CA$55.9m as well as receivables valued at CA$397.9k due within 12 months. Zooming in on the latest balance sheet data, we can see that Fission Uranium had liabilities of CA$2.77m due within 12 months and liabilities of CA$9.16m due beyond that. See our latest analysis for Fission Uraniumĭebt-equity-history-analysis How Healthy Is Fission Uranium's Balance Sheet? The first step when considering a company's debt levels is to consider its cash and debt together. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. What Risk Does Debt Bring?ĭebt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. But the real question is whether this debt is making the company risky. As with many other companies Fission Uranium Corp. The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |