Debt Cash – CTXETG http://ctxetg.com/ Fri, 08 Oct 2021 21:22:37 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://ctxetg.com/wp-content/uploads/2021/06/icon-150x150.png Debt Cash – CTXETG http://ctxetg.com/ 32 32 Half of China’s top developers have crossed Beijing’s “red lines” https://ctxetg.com/half-of-chinas-top-developers-have-crossed-beijings-red-lines/ https://ctxetg.com/half-of-chinas-top-developers-have-crossed-beijings-red-lines/#respond Fri, 08 Oct 2021 20:00:15 +0000 https://ctxetg.com/half-of-chinas-top-developers-have-crossed-beijings-red-lines/ You see a snapshot of an interactive chart. This is most likely because you are offline or JavaScript is disabled in your browser. According to a Financial Times analysis of the latest data available, nearly half of China’s top 30 developers have broken at least one of Beijing’s recently introduced rules on real estate leverage. […]]]>

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According to a Financial Times analysis of the latest data available, nearly half of China’s top 30 developers have broken at least one of Beijing’s recently introduced rules on real estate leverage.

In August last year, the Chinese government unveiled the “three red lines”, which aim to constrain the debt of real estate developers according to three balance sheet indicators: the liability / asset ratio; net debt to equity; and from cash to short-term borrowings.

FT’s analysis, based on data from Beike Research, part of Chinese real estate group KE Holdings, showed that of the 30 developers, 14 had crossed at least one red line as of June 14. These companies represented the majority of the 30 developers. sales last year.

The results come as Chinese group Evergrande, the world’s most indebted developer, is on the verge of default after missing an interest payment last month.

Evergrande’s problems have put China’s debt policy in the spotlight and disrupted global markets. The company is the most extreme example of the high leverage that has funded Chinese real estate development for years – and supported the country’s rapid growth – and which the government is now seeking to bring under control.

Only a few of the 30 developers in the FT’s analysis had breached at least two red lines, but liquidity crises at these companies, including Evergrande and Guangzhou R&F, raised fears of contagion to the wider Chinese economy.

If developers break the rules, they face caps on their ability to take on new debt.

S&P Global Ratings noted that although the Chinese government has not released an official statement regarding the rules, they have been widely reported in national media since last summer.

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Liability / asset ratio (excluding anticipated receipts)

The liability-to-asset ratio is the measure of leverage that by far surprises most of China’s biggest real estate developers, reflecting not only the extent of their debt but also the obligations to the companies they work with.

Country Garden Holdings, China’s largest developer by sales last year, had a liability-to-asset ratio of 78.5% in June, breaking the red line limit of 70%. The group’s shares have fallen 26% this year, but its bonds due 2024 are trading above face value, in stark contrast to many of its peers.

Of the almost Rmb2tn of Evergrande’s total liabilities, almost half are made up of trade and other debts.

Many developers also have off-balance sheet bonds which should increase their leverage if included in the metrics.

Across the industry, businesses often sell properties to homebuyers prior to completion and receive payment up front, called advance receipts. Developers add “contractual liabilities” to their balance sheets to offset cash inflows, before finally making a profit after projects are completed.

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Net gear

Guangzhou R&F, the only Chinese developer to cross the three red lines, is doing the worst in terms of net debt.

The measure subtracts a company’s cash from its debt and then measures the difference to equity. It’s a way of comparing debt with the value of a business.

Besides Evergrande, Guangzhou R&F has been one of the most watched developers. This year, it finalized the sale of a major logistics development in southern China to Blackstone, the US private equity firm. She also sold assets to Country Garden.

Its bonds have sold sharply in recent weeks, but have rebounded after shareholders injected funds, which Fitch says will be used to repay future bonds.

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Short-term cash-to-debt ratio

Perhaps the simplest measure of developer vulnerability is how much money the company has to pay off debts about to fall due – and many are close to the line, putting pressure on them. on their ability to make repayments.

Evergrande, the second to violate the measure at the end of June, attempted to raise funds by getting rid of the assets, some of which were listed in an interim report in August that also warned of the risk of default.

But his liabilities eclipse the assets he has managed to sell. Evergrande’s shares are suspended along with those of its property management subsidiary, which it listed in Hong Kong late last year. On Monday, the developer said it anticipated a potential takeover offer for the unit.

Another recent sale, of part of a stake in Shengjing Bank, highlighted the creditors’ rush to recoup the faltering developer’s losses: the bank demanded that the proceeds from the sale be used to pay off debts. which are owed to him by Evergrande.


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Trump’s debt now stands at $ 1.3 billion https://ctxetg.com/trumps-debt-now-stands-at-1-3-billion/ https://ctxetg.com/trumps-debt-now-stands-at-1-3-billion/#respond Thu, 07 Oct 2021 10:30:00 +0000 https://ctxetg.com/trumps-debt-now-stands-at-1-3-billion/ The real estate mogul should have no problem paying off his short-term loans. But in 2024, when he might run for president again, things could get risky. DDonald Trump’s company owes around $ 1.3 billion, nearly $ 200 million more than when he left office. But that doesn’t mean he’s under more financial pressure. In […]]]>

The real estate mogul should have no problem paying off his short-term loans. But in 2024, when he might run for president again, things could get risky.

DDonald Trump’s company owes around $ 1.3 billion, nearly $ 200 million more than when he left office. But that doesn’t mean he’s under more financial pressure. In fact, Trump’s record is in better shape today than it was months ago.

The reason: Earlier this year, JPMorgan Chase helped loan $ 1.2 billion against a San Francisco office complex in which Trump has a 30% minority stake. As a sponsor, Trump would not be personally liable for this debt in the event of default. But it still has a huge effect on his finances. In fact, the new loan allowed Trump and his publicly traded business partner, Vornado Realty Trust, to repay their previous debt against the building, which was owed last month, and extract about $ 616 million in cash.

In other words, refinancing increased the debt on the property but also provided more cash to its owners. Had Trump received 30% of the cashout, the deal would have increased his cash holdings from around $ 110 million to almost $ 300 million.

This money could come in handy over the next two years. In September 2022, Trump has another loan due, this one worth $ 100 million on a property he wholly owns: the commercial space inside the Trump Tower. Theoretically, Trump could also refinance this loan. Real estate is worth around $ 275 million, so a bank should be willing to offer a $ 100 million fee against it. Even if the former president can’t find a business to refinance the Trump Tower, he should be able to repay the money with his own funds.


CHRONOLOGY

Trump has an estimated debt of $ 738 million due over the next three years. If he’s careful, he should be able to get by.


He would probably still be able to replenish his cash reserve. Two months after the Trump Tower loan is due, another debt will fall due, this one related to a New York skyscraper named 1290 Avenue of the Americas. Like the San Francisco building, Trump owns a limited 30% stake in 1290 Avenue of the Americas alongside Vornado, which owns the remaining 70%. If Vornado refinances this building as well, Trump could easily extract an additional $ 75 million.

That would give the former president additional leeway until 2023, when he has two loans of a combined initial capital of $ 125 million maturing against Trump Doral, a golf resort in Miami. This property has been struggling recently, so refinancing could be difficult. The same is true of Trump’s hotels in DC and Chicago, whose Deutsche Bank debt is estimated at $ 215 million and expires in 2024.

In other words: the more cash Trump can store now, the safer he will be then, even if that means increasing his debt in the meantime.

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We believe Bapcor (ASX: BAP) can stay on top of its debt https://ctxetg.com/we-believe-bapcor-asx-bap-can-stay-on-top-of-its-debt/ https://ctxetg.com/we-believe-bapcor-asx-bap-can-stay-on-top-of-its-debt/#respond Wed, 06 Oct 2021 20:47:45 +0000 https://ctxetg.com/we-believe-bapcor-asx-bap-can-stay-on-top-of-its-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. We note that […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. We note that Bapcor Limited (ASX: BAP) has debt on its balance sheet. But the most important question is: what risk does this debt create?

When Is Debt a Problem?

Debt helps a business until the business struggles to repay it, 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. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. That said, the most common situation is where a business manages its debt reasonably well – and to its own advantage. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest review for Bapcor

What is Bapcor’s debt?

The image below, which you can click for more details, shows Bapcor owed AUS $ 204.2 million at the end of June 2021, a reduction from A $ 229.1 million on a year. On the other hand, he has A $ 39.6 million in cash, resulting in net debt of around A $ 164.6 million.

ASX: BAP History of debt to equity October 6, 2021

How strong is Bapcor’s balance sheet?

According to the latest published balance sheet, Bapcor had a liability of A $ 363.7 million due within 12 months and a liability of A $ 382.3 million due beyond 12 months. On the other hand, he had A $ 39.6 million in cash and A $ 181.4 million in receivables due within one year. As a result, its liabilities exceed the sum of its cash and (short-term) receivables by AU $ 525.0 million.

While that might sound like a lot, it’s not that big of a deal since Bapcor has a market cap of AU $ 2.44 billion, and could therefore likely strengthen its balance sheet by raising capital if needed. But it is clear that it is absolutely necessary to take a close look at whether it can manage its debt without dilution.

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

Bapcor has a low net debt to EBITDA ratio of just 0.76. And its EBIT covers its interest costs 13.1 times more. So we’re pretty relaxed about its ultra-conservative use of debt. On top of that, we are happy to report that Bapcor has increased its EBIT by 45%, reducing the specter of future debt repayments. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Bapcor can strengthen its balance sheet over time. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. We must therefore clearly check whether this EBIT generates a corresponding free cash flow. Over the past three years, Bapcor has recorded free cash flow of 58% of its EBIT, which is close to normal given that free cash flow excludes interest and taxes. This free cash flow puts the business in a good position to repay debt, if any.

Our point of view

The good news is that Bapcor’s demonstrated ability to cover interest costs with EBIT delights us like a fluffy puppy does a toddler. And that’s just the start of good news as its EBIT growth rate is also very encouraging. By zooming out, Bapcor seems to be using the debt in a very reasonable way; and that gets the nod from us. After all, reasonable leverage can increase returns on equity. The balance sheet is clearly the area you need to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist off the balance sheet. Note that Bapcor shows 1 warning sign in our investment analysis , you must know…

If you are interested in investing in companies that can generate profits without the burden of debt, check out this page 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 using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

When trading Bapcor or any other investment, use the platform seen by many as the professionals’ gateway to the global market, Interactive brokers. You get the cheapest * trading on stocks, options, futures, forex, bonds and funds from around the world from a single integrated account.Promoted


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US should raise debt limit and avoid default – Moody’s https://ctxetg.com/us-should-raise-debt-limit-and-avoid-default-moodys/ https://ctxetg.com/us-should-raise-debt-limit-and-avoid-default-moodys/#respond Tue, 05 Oct 2021 19:31:00 +0000 https://ctxetg.com/us-should-raise-debt-limit-and-avoid-default-moodys/ The dome of the US Capitol is seen as the sun sets over Capitol Hill in Washington, United States, July 26, 2019. REUTERS / Erin Scott / File Photo Oct. 5 (Reuters) – Moody’s Investors Service said on Tuesday that the stable outlook for the United States’ Aaa rating reflected its view that the country […]]]>

The dome of the US Capitol is seen as the sun sets over Capitol Hill in Washington, United States, July 26, 2019. REUTERS / Erin Scott / File Photo

Oct. 5 (Reuters) – Moody’s Investors Service said on Tuesday that the stable outlook for the United States’ Aaa rating reflected its view that the country would increase its debt limit and continue to meet its obligations under the service debt on time.

U.S. Treasury Secretary Janet Yellen has warned the government could run out of liquidity by October 18 if the debt ceiling is not raised or suspended, warning that this will be its first default in payment. A two-year suspension on the debt ceiling expired in July, and Democrats and Republicans in Congress remain at odds over whether to extend or increase it.

“At this point, given the Republicans’ categorical refusal to vote to suspend or raise the debt ceiling, we would expect Democrats to likely come to an agreement within their own party to raise the debt ceiling. via the budget reconciliation process, which requires only a simple majority of the Democratic votes in the Senate (50 senators and the vice president), in time to avoid a default, “the rating agency said in a statement. report.

If the limit is not raised, Moody’s said it believes the government will prioritize debt payments “to preserve the full confidence and credit of the U.S. government and avoid significant disruption in global financial markets.” .

Moody’s said the United States was to pay interest of about $ 4 billion on October 15, $ 14 billion on November 1 and $ 49 billion on November 15 and that a missed payment would be considered a default. payment.

“In general, we would not consider this result consistent with an Aaa rating and would most likely downgrade all Treasury securities except extraordinary

extenuating circumstances, ”he said.

However, the impact on the US sovereign credit profile and rating is expected to be limited, as Moody’s said its ratings reflect the expected loss on debt with an assumed US default of short duration and corrected with a recovery rate of 100. %.

Reporting by Mehr Bedi in Bengaluru and Karen Pierog in Chicago; Editing by Shailesh Kuber and Aurora Ellis

Our standards: Thomson Reuters Trust Principles.


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A note on ROE and Debt to Equity of Geekay Wires Limited (NSE: GEEKAYWIRE) https://ctxetg.com/a-note-on-roe-and-debt-to-equity-of-geekay-wires-limited-nse-geekaywire/ https://ctxetg.com/a-note-on-roe-and-debt-to-equity-of-geekay-wires-limited-nse-geekaywire/#respond Tue, 05 Oct 2021 02:11:33 +0000 https://ctxetg.com/a-note-on-roe-and-debt-to-equity-of-geekay-wires-limited-nse-geekaywire/ One of the best investments we can make is in our own knowledge and skills. With that in mind, this article will discuss how we can use Return on Equity (ROE) to better understand a business. As a learning-by-doing, we’ll take a look at the ROE to better understand Geekay Wires Limited (NSE: GEEKAYWIRE). Return […]]]>

One of the best investments we can make is in our own knowledge and skills. With that in mind, this article will discuss how we can use Return on Equity (ROE) to better understand a business. As a learning-by-doing, we’ll take a look at the ROE to better understand Geekay Wires Limited (NSE: GEEKAYWIRE).

Return on equity or ROE is a test of how effectively a company increases its value and manages investor money. In other words, it is a profitability ratio that measures the rate of return on capital contributed by the shareholders of the company.

See our latest review for Geekay Wires

How to calculate return on equity?

Return on equity can be calculated using the formula:

Return on equity = Net income (from continuing operations) ÷ Equity

So, based on the above formula, the ROE of Geekay Wires is:

14% = ₹ 63m ₹ 450m (Based on the last twelve months up to June 2021).

The “return” is the annual profit. One way to conceptualize this is that for every 1 of shareholders’ capital it has, the company made 0.14 of profit.

Does Geekay Wires have a good ROE?

By comparing a company’s ROE with its industry average, we can get a quick measure of its quality. The limitation of this approach is that some companies are very different from others, even within the same industry classification. You can see in the graph below that Geekay Wires has a ROE that is fairly close to the metals and mining industry average (15%).

NSEI: GEEKAYWIRE Return on equity October 5, 2021

It is neither particularly good nor bad. Even though the ROE is respectable compared to the industry, it is worth checking out if the company’s ROE is helped by high debt levels. If so, it increases their exposure to financial risk. You can see the 3 risks we have identified for Geekay Wires by visiting our risk dashboard for free on our platform here.

Why You Should Consider Debt When Looking At ROE

Most businesses need money – from somewhere – to increase their profits. This liquidity can come from retained earnings, the issuance of new shares (shares) or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt necessary for growth will increase returns, but will have no impact on equity. In this way, the use of debt will increase the ROE, even if the basic economy of the business remains the same.

Geekay Wires’ debt and its 14% ROE

Noteworthy is Geekay Wires’ high reliance on debt, which earned it a debt-to-equity ratio of 1.95. Its ROE is quite low, even with significant recourse to debt; this is not a good result, in our opinion. Investors should think carefully about how a business will perform if it weren’t able to borrow so easily, as credit markets change over time.

Summary

Return on equity is a way to compare the quality of the business of different companies. A business that can earn a high return on equity without going into debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with the least amount of debt.

That said, while ROE is a useful indicator of how good a business is, you’ll need to look at a whole range of factors to determine the right price to buy a stock. It is important to take into account other factors, such as future profit growth and the amount of investment required for the future. You can see how the business has grown in the past by checking out this FREE detailed graphic past profits, income and cash flow.

Sure, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies.

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

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade Geekay Wires, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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Ontex Announces Cash Payment of € 81 Million Received from Arbitration Settlement Regarding the Acquisition of its Brazilian Business in 2017 https://ctxetg.com/ontex-announces-cash-payment-of-e-81-million-received-from-arbitration-settlement-regarding-the-acquisition-of-its-brazilian-business-in-2017/ https://ctxetg.com/ontex-announces-cash-payment-of-e-81-million-received-from-arbitration-settlement-regarding-the-acquisition-of-its-brazilian-business-in-2017/#respond Mon, 04 Oct 2021 05:00:00 +0000 https://ctxetg.com/ontex-announces-cash-payment-of-e-81-million-received-from-arbitration-settlement-regarding-the-acquisition-of-its-brazilian-business-in-2017/ AALST-EREMBODEGEM, Belgium – (COMMERCIAL THREAD) – Regulatory news: Ontex Group NV (Euronext Brussels: ONTEX) announced today that Ontex has received 500 million Brazilian reais (81 million euros1) of Hypera SA (“Hypera”, formerly Hypermarcas SA) on October 1, 2021. This was foreseen when Ontex entered into an agreement with Hypera as announced on September 15, 2021, […]]]>

AALST-EREMBODEGEM, Belgium – (COMMERCIAL THREAD) – Regulatory news:

Ontex Group NV (Euronext Brussels: ONTEX) announced today that Ontex has received 500 million Brazilian reais (81 million euros1) of Hypera SA (“Hypera”, formerly Hypermarcas SA) on October 1, 2021. This was foreseen when Ontex entered into an agreement with Hypera as announced on September 15, 2021, settling certain claims relating to the acquisition by Ontex of the Hyperera Brazilian personal hygiene business in March 2017 with an enterprise value of 1 billion Brazilian reais.

After deduction of approximately € 7 million in arbitration costs, the balance of the settlement amount will be used to repay the debt, in accordance with the Group’s ambition to reduce indebtedness.

Note 1: The settlement amount is denominated in Brazilian Reais. The amount in € of this press release is calculated at the EUR / BRL rate of 6.19.

About Ontex

Ontex is a leading international provider of personal hygiene solutions, with expertise in baby care, feminine care and adult care. Ontex’s innovative products are distributed in more than 110 countries through Ontex brands such as BBTips, BioBaby, Pompom, Bigfral, CanBebe, CanPed, iD and Serenity, as well as through leading retailer brands. Employing some 10,000 enthusiasts worldwide, Ontex operates in 21 countries, with its headquarters in Aalst, Belgium. Ontex is listed on Euronext Brussels and is part of Bel Mid®. To keep up with the latest news, visit www.ontex.com or follow us on LinkedIn, Facebook, Instagram and YouTube.


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Vistry Group (LON: VTY) has a rock solid balance sheet https://ctxetg.com/vistry-group-lon-vty-has-a-rock-solid-balance-sheet/ https://ctxetg.com/vistry-group-lon-vty-has-a-rock-solid-balance-sheet/#respond Sun, 03 Oct 2021 08:51:01 +0000 https://ctxetg.com/vistry-group-lon-vty-has-a-rock-solid-balance-sheet/ David Iben put it well when he said: “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. […]]]>

David Iben put it well when he said: “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Like many other companies Vistry SA Group (LON: VTY) uses debt. But the real question is whether this debt makes the business risky.

What risk does debt entail?

Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. If things really go wrong, lenders can take over the business. However, a more common (but still costly) situation is where a company has to dilute its shareholders at a cheap share price just to get its debt under control. Of course, debt can be an important tool in businesses, especially capital intensive businesses. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest review for Vistry Group

What is the debt of the Vistry group?

The image below, which you can click for more details, shows Vistry Group owed £ 311.0million at the end of June 2021, a reduction from the £ 578.0million over a year. However, he has £ 342.6million in cash offsetting this, leading to a net cash of £ 31.6million.

LSE: VTY Debt to equity history October 3, 2021

A look at the responsibilities of the Vistry group

According to the latest published balance sheet, Vistry Group had debts of £ 934.5million due within 12 months and debts of £ 556.1million due beyond 12 months. In compensation for these obligations, it had cash of £ 342.6 million as well as receivables valued at £ 245.2 million due within 12 months. As a result, its liabilities exceed the sum of its cash and (short-term) receivables by £ 902.8 million.

While that might sound like a lot, it’s not that big of a deal since Vistry Group has a market cap of £ 2.66bn, so it could likely strengthen its balance sheet by raising capital if needed. But we absolutely want to keep our eyes open for indications that its debt is too risky. While it has some liabilities to note, Vistry Group also has more cash than debt, so we’re pretty confident it can handle its debt safely.

Best of all, Vistry Group increased its EBIT by 127% last year, which is an impressive improvement. This boost will make it even easier to pay down debt in the future. There is no doubt that we learn the most about debt from the balance sheet. But it is future profits, more than anything, that will determine the ability of the Vistry Group to maintain a healthy balance sheet in the future. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. While Vistry Group has net cash on its balance sheet, it’s still worth looking at its ability to convert earnings before interest and taxes (EBIT) into free cash flow, to help us understand how fast it’s building ( or erodes) this cash balance. Over the past three years, Vistry Group has actually generated more free cash flow than EBIT. There is nothing better than cash flow to stay in the good graces of your lenders.

In summary

Although Vistry Group has more liabilities than liquid assets, it also has net cash of £ 31.6million. And he impressed us with free cash flow of £ 326million, or 115% of his EBIT. We therefore do not believe that the use of debt by Vistry Group is risky. The balance sheet is clearly the area you need to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist off the balance sheet. For example, we have identified 1 warning sign for Vistry Group that you need to be aware of.

At the end of the day, it’s often best to focus on businesses with no net debt. You can access our special list of these companies (all with a history of profit growth). It’s free.

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

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade Vistry Group, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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Here’s why we’re not too worried about Minerva Neurosciences’ cash burn situation (NASDAQ: NERV) https://ctxetg.com/heres-why-were-not-too-worried-about-minerva-neurosciences-cash-burn-situation-nasdaq-nerv/ https://ctxetg.com/heres-why-were-not-too-worried-about-minerva-neurosciences-cash-burn-situation-nasdaq-nerv/#respond Sat, 02 Oct 2021 14:25:49 +0000 https://ctxetg.com/heres-why-were-not-too-worried-about-minerva-neurosciences-cash-burn-situation-nasdaq-nerv/ Even when a business loses money, it is possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mineral exploration companies often lose money for years before they are successful with a new treatment or mineral discovery. But the harsh reality is that many, many […]]]>

Even when a business loses money, it is possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mineral exploration companies often lose money for years before they are successful with a new treatment or mineral discovery. But the harsh reality is that many, many loss-making companies burn all their money and go bankrupt.

In view of this risk, we thought to examine whether Minerva Neurosciences (NASDAQ: NERV) shareholders should be concerned about its consumption of cash. In this report, we will consider the company’s annual negative free cash flow, which we now call “cash burn”. First, we will determine its cash trail by comparing its cash consumption with its cash reserves.

Check out our latest review for Minerva Neurosciences

Does Minerva Neurosciences have a long cash flow track?

A company’s cash flow trail is calculated by dividing its cash reserve by its cash consumption. When Minerva Neurosciences last published its balance sheet in June 2021, it had no debt and cash worth $ 74 million. Looking at last year, the company burned $ 28 million. Therefore, as of June 2021, he had 2.6 years of cash flow. Notably, analysts predict that Minerva Neurosciences will break even (at the level of free cash flow) in about 4 years. This means that, unless the company quickly reduces its consumption of cash, it may well be looking to raise more cash. Pictured below, you can see how his cash holdings have changed over time.

NasdaqGM: NERV History of debt to equity October 2, 2021

How does Minerva Neurosciences’ money consumption change over time?

Minerva Neurosciences has not recorded any revenue over the past year, indicating that it is a start-up company that continues to grow its business. Nonetheless, we can still examine its cash consumption trajectory as part of our assessment of its cash consumption situation. While we’re not excited about it, the 30% year-over-year reduction in cash usage suggests the business can continue to operate for some time. If the past is always worth studying, it is the future that matters most. You might want to take a look at how the business is expected to grow over the next few years.

Would it be difficult for Minerva Neurosciences to raise more money for growth?

While Minerva Neurosciences shows a sharp reduction in its consumption of cash, it’s still worth considering how easily it could raise more cash, if only to fuel faster growth. Businesses can raise capital through debt or equity. Many companies end up issuing new shares to fund their future growth. We can compare a company’s cash consumption to its market capitalization to get an idea of ​​how many new shares a company would need to issue to fund its one-year operations.

Minerva Neurosciences’ cash consumption of US $ 28 million represents approximately 42% of its market capitalization of US $ 68 million. These are high expenses relative to the value of the entire company, so if it has to issue stock to fund more growth, it could end up really hurting shareholder returns (through significant dilution).

So, should we be concerned about the cash burn of Minerva Neurosciences?

Even though its consumption of cash relative to its market cap makes us a little nervous, we are forced to mention that we thought Minerva Neurosciences’ cash trail was relatively promising. A real bright spot is that analysts expect the company to break even. While we’re the type of investor that’s always a little concerned about the risks of money-burning companies, the metrics we’ve discussed in this article leave us relatively comfortable with Minerva Neurosciences’ situation. On another note, we conducted a thorough investigation of the company and identified 6 warning signs for Minerva Neurosciences (2 are significant!) That you should know before investing here.

Sure Minerva Neurosciences may not be the best stock to buy. So you might want to see this free a set of companies with a high return on equity, or that list of stocks that insiders buy.

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

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade Minerva Neurosciences, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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CanSino Biologics (HKG: 6185) Seems to Use Debt Quite Wisely https://ctxetg.com/cansino-biologics-hkg-6185-seems-to-use-debt-quite-wisely/ https://ctxetg.com/cansino-biologics-hkg-6185-seems-to-use-debt-quite-wisely/#respond Sat, 02 Oct 2021 01:30:52 +0000 https://ctxetg.com/cansino-biologics-hkg-6185-seems-to-use-debt-quite-wisely/ Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital”. So it can be obvious that you need to consider debt, when you think about how risky a given stock is, because too […]]]>

Berkshire Hathaway’s Charlie Munger-backed external fund manager Li Lu is quick to say “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital”. So it can be obvious that you need to consider debt, when you think about how risky a given stock is, because too much debt can sink a business. Above all, CanSino Biologics Inc. (HKG: 6185) carries the debt. But the real question is whether this debt makes the business risky.

When is debt dangerous?

Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. If things really go wrong, lenders can take over the business. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think of a business’s use of debt, we first look at cash flow and debt together.

Check out our latest review for CanSino Biologics

What is CanSino Biologics’ net debt?

You can click on the graph below for the historical figures, but it shows that as of June 2021, CanSino Biologics had a debt of CND 691.7 million, an increase from CN’s 140.2 million, on a year. But he also has CNN 6.71 billion in cash to make up for this, which means he has a net cash position of CNN 6.02 billion.

SEHK: 6185 History of debt to equity October 2, 2021

How strong is CanSino Biologics’ balance sheet?

According to the latest published balance sheet, CanSino Biologics had a liability of CN ¥ 2.82b due within 12 months and a liability of CN ¥ 417.1m due beyond 12 months. In compensation for these obligations, he had cash of CNS 6.71 billion as well as receivables valued at CN 697.3 million due within 12 months. So he actually CN ¥ 4.17b Following liquid assets as total liabilities.

This surplus suggests that CanSino Biologics has a prudent balance sheet and could likely eliminate its debt without too much difficulty. Put simply, the fact that CanSino Biologics has more money than debt is probably a good indication that it can safely manage its debt.

It was also good to see that despite losing money on the EBIT line last year, CanSino Biologics made a difference in the past 12 months, delivering EBIT of CN 367 million. The balance sheet is clearly the area you need to focus on when analyzing debt. But it is future profits, more than anything, that will determine CanSino Biologics’ ability to maintain a healthy balance sheet in the future. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, while the IRS may love accounting profits, lenders only accept hard cash. CanSino Biologics may have net cash on the balance sheet, but it’s always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its needs and its capacity. to manage debt. Over the past year, CanSino Biologics recorded substantial total negative free cash flow. While this may be the result of spending on growth, it makes debt much riskier.

In summary

While we agree with investors who find the debt of concern, you should keep in mind that CanSino Biologics has net cash of 6.02b CN, as well as more liquid assets than liabilities. We are therefore not concerned with the use of debt by CanSino Biologics. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks lie on the balance sheet – far from it. For example, CanSino Biologics has 2 warning signs (and 1 that shouldn’t be ignored) we think you should be aware of.

At the end of the day, it’s often best to focus on businesses with no net debt. You can access our special list of these companies (all with a history of profit growth). It’s free.

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

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

If you decide to trade in CanSino Biologics, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted


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We believe Koninklijke DSM (AMS: DSM) can stay on top of its debt https://ctxetg.com/we-believe-koninklijke-dsm-ams-dsm-can-stay-on-top-of-its-debt/ https://ctxetg.com/we-believe-koninklijke-dsm-ams-dsm-can-stay-on-top-of-its-debt/#respond Fri, 01 Oct 2021 13:59:38 +0000 https://ctxetg.com/we-believe-koninklijke-dsm-ams-dsm-can-stay-on-top-of-its-debt/ Legendary fund manager Li Lu (who Charlie Munger supported) once said, “The biggest risk in investing is not price volatility, but the possibility that you will suffer a permanent loss of capital. It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a […]]]>

Legendary fund manager Li Lu (who Charlie Munger supported) once said, “The biggest risk in investing is not price volatility, but the possibility that you will suffer a permanent loss of capital. It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a business collapses. Above all, Koninklijke DSM NV (AMS: DSM) carries the debt. But should shareholders be concerned about its use of debt?

Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. If things really go wrong, lenders can take over the business. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. That said, the most common situation is where a business manages its debt reasonably well – and to its own advantage. When we think of a business’s use of debt, we first look at cash flow and debt together.

See our latest review for Koninklijke DSM

How much debt does Koninklijke DSM have?

As you can see below, Koninklijke DSM had 3.12 billion euros in debt in June 2021, up from 3.88 billion euros the previous year. However, he also had € 1.86 billion in cash, so his net debt is € 1.27 billion.

ENXTAM: History of debt on equity of DSM October 1, 2021

How strong is Koninklijke DSM’s balance sheet?

According to the latest published balance sheet, Koninklijke DSM had liabilities of 2.33 billion euros at 12 months and liabilities of 4.17 billion euros over 12 months. On the other hand, he had cash of 1.86 billion euros and 1.74 billion euros in receivables less than one year. It therefore has total liabilities of 2.90 billion euros more than its combined cash and short-term receivables.

Of course, Koninklijke DSM has a titanic market cap of 29.5 billion euros, so this liability is probably manageable. But there are enough liabilities that we would certainly recommend that shareholders continue to monitor the balance sheet going forward.

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

Koninklijke DSM has a net debt of only 0.92 times EBITDA, indicating that he is certainly not a reckless borrower. And it has 7.3 times interest coverage, which is more than enough. Fortunately, Koninklijke DSM increased its EBIT by 5.8% last year, which makes this debt load even more manageable. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future profits, more than anything, that will determine Koninklijke DSM’s ability to maintain a healthy balance sheet in the future. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, a business needs free cash flow to repay its debts; accounting profits are not enough. The logical step is therefore to examine the proportion of this EBIT that corresponds to the actual free cash flow. Over the past three years, Koninklijke DSM has achieved free cash flow totaling 99% of its EBIT, which is higher than what we normally expected. This puts him in a very strong position to pay off the debt.

Our point of view

Fortunately, Koninklijke DSM’s impressive conversion of EBIT to free cash flow means that it has the upper hand over its debt. And that’s just the start of the good news as its net debt to EBITDA is also very encouraging. Overall, we think Koninklijke DSM’s use of debt seems quite reasonable and we don’t care. After all, reasonable leverage can increase returns on equity. 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 off the balance sheet. To do this, you need to know the 1 warning sign we spotted with Koninklijke DSM.

Of course, if you are the type of investor who prefers to buy stocks without going into debt, feel free to check out our exclusive list of cash net growth stocks today.

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

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.

When trading Koninklijke DSM or any other investment, use the platform seen by many as the gateway for professionals to the global market, Interactive brokers. You get the cheapest * trading on stocks, options, futures, forex, bonds and funds from around the world from a single integrated account.Promoted


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