Trade Liabilities – Goodwill Savannah GA http://goodwillsavannahga.org/ Wed, 04 Aug 2021 14:00:20 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://goodwillsavannahga.org/wp-content/uploads/2021/04/cropped-goodwill-32x32.png Trade Liabilities – Goodwill Savannah GA http://goodwillsavannahga.org/ 32 32 Is Western Energy Services (TSE: WRG) Using Debt Wisely? http://goodwillsavannahga.org/is-western-energy-services-tse-wrg-using-debt-wisely/ Wed, 04 Aug 2021 13:06:17 +0000 http://goodwillsavannahga.org/is-western-energy-services-tse-wrg-using-debt-wisely/

Legendary fund manager Li Lu (whom 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. 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. Mostly, Western Energy Services Corp. (TSE: WRG) is in debt. But should shareholders be concerned about its use of debt?

When is debt dangerous?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. 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, many companies use debt to finance their growth without negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash flow and debt together.

Check out our latest review for Western Energy Services

What is the net debt of Western Energy Services?

You can click on the graph below for historical figures, but it shows that as of June 2021, Western Energy Services had a debt of C $ 221.6 million, an increase from $ 208.5 million. Canadian, over one year. However, given that it has a cash reserve of C $ 5.59 million, its net debt is less, at approximately C $ 216.0 million.

TSX: WRG Debt to Equity History August 4, 2021

How strong is Western Energy Services’ balance sheet?

Zooming in on the latest balance sheet data, we can see that Western Energy Services had C $ 28.1 million in liabilities due within 12 months and C $ 231.4 million in liabilities beyond. In compensation for these obligations, it had cash of C $ 5.59 million as well as receivables valued at C $ 17.3 million maturing within 12 months. Its liabilities therefore total C $ 236.6 million more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the C $ 23.7 million company, like a colossus towering over mere mortals. So we would be watching its record closely, without a doubt. Ultimately, Western Energy Services would likely need a major recapitalization if its creditors demanded repayment. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether Western Energy Services can strengthen its balance sheet over time. So if you are focused on the future you can check out this free report showing analysts’ earnings forecasts.

Over 12 months, Western Energy Services recorded a loss in EBIT and saw sales fall to C $ 98 million, a decrease of 37%. To be frank, that doesn’t bode well.

Emptor Warning

While Western Energy Services’ decline in revenue is about as comforting as a wet blanket, its earnings before interest and taxes (EBIT) can be said to be even less attractive. Its loss of EBIT was Cdn $ 28 million. Thinking about this and the large total liabilities, it’s hard to know what to say about the stock due to our intense de-refinement for it. Like all long shots, we’re sure it has a brilliant presentation outlining its blue sky potential. But the reality is that he has few liquid assets compared to liabilities and has lost C $ 37 million in the past year. So we’re not very keen on owning this stock. It’s too risky for us. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist off the balance sheet. For example, Western Energy Services has 2 warning signs we think you should be aware.

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 growth net stocks today.

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We believe Usha Martin (NSE: USHAMART) can stay on top of his debt http://goodwillsavannahga.org/we-believe-usha-martin-nse-ushamart-can-stay-on-top-of-his-debt/ Fri, 23 Jul 2021 02:09:17 +0000 http://goodwillsavannahga.org/we-believe-usha-martin-nse-ushamart-can-stay-on-top-of-his-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.” So it can be obvious that you need to consider debt, when you think about how risky a given stock is, because too much debt can sink a business. We can see that Usha Martin Limited (NSE: USHAMART) uses debt in his business. 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. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. 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.

See our latest review for Usha Martin

What is Usha Martin’s net debt?

As you can see below, Usha Martin had 4.87 billion yen in debt in March 2021, up from 5.79 billion yen the year before. However, given that it has a cash reserve of 994.6 million yen, its net debt is less, at around 3.87 billion yen.

NSEI: USHAMART History of debt to equity July 23, 2021

How strong is Usha Martin’s balance sheet?

According to the latest published balance sheet, Usha Martin had liabilities of 8.11 billion yen due within 12 months and liabilities of 3.88 billion yen due beyond 12 months. In return, he had 994.6 million yen in cash and 5.14 billion yen in receivables due within 12 months. Its liabilities are therefore 5.85 billion euros more than the combination of its cash and short-term receivables.

While that might sound like a lot, it’s not that bad as Usha Martin has a market cap of 19.8 billion yen, and so she could likely strengthen her balance sheet by raising capital if needed. But it is clear that it is absolutely necessary to take a close look whether it can manage its debt without dilution.

We measure a company’s debt load relative to its earning capacity 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 costs (interest coverage). Thus, we consider debt versus earnings with and without amortization charges.

While Usha Martin’s low debt-to-EBITDA ratio of 1.4 suggests only a modest use of debt, the fact that EBIT only covered interest expense 4.6 times over the past year makes think. But the interest payments are certainly enough to make us think about how affordable his debt is. It is also important to note that Usha Martin has increased its EBIT by a very respectable 29% over the past year, improving its ability to repay its debt. There is no doubt that we learn the most about debt from the balance sheet. But it is Usha Martin’s profits that will influence the way the balance sheet looks in the future. So, when considering debt, it is really worth looking at the profit trend. Click here for an interactive snapshot.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. The logical step is therefore to examine the proportion of this EBIT that corresponds to the actual free cash flow. Fortunately for all shareholders, Usha Martin has actually generated more free cash flow than EBIT over the past three years. This kind of solid money conversion makes us as excited as the crowd when the beat drops at a Daft Punk concert.

Our point of view

The good news is that Usha Martin’s demonstrated ability to convert EBIT into free cash flow delights us like a fluffy puppy does a toddler. And the good news doesn’t end there, because its EBIT growth rate also supports this impression! Looking at the big picture, we think Usha Martin’s use of debt seems completely 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. However, not all investment risks lie on the balance sheet – far from it. These risks can be difficult to spot. Every business has them, and we’ve spotted 1 warning sign for Usha Martin you should know.

At the end of the day, sometimes it’s easier to focus on businesses that don’t even need to go into debt. Readers can access a list of growth stocks with zero net debt 100% free, at present.

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Is Middleby (NASDAQ: MIDD) a risky investment? http://goodwillsavannahga.org/is-middleby-nasdaq-midd-a-risky-investment/ Wed, 21 Jul 2021 11:04:14 +0000 http://goodwillsavannahga.org/is-middleby-nasdaq-midd-a-risky-investment/

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 is 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. Like many other companies The Middleby Company (NASDAQ: MIDD) uses debt. But should shareholders be concerned about its use of debt?

What risk does debt entail?

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. 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. By replacing dilution, however, debt can be a very good tool for companies that need capital to invest in growth at high rates of return. The first step in examining a company’s debt levels is to consider its cash flow and debt together.

See our latest analysis for Middleby

What is Middleby’s debt?

You can click on the chart below for historical numbers, but it shows Middleby had $ 1.78 billion in debt in April 2021, down from $ 2.26 billion a year earlier. However, given that it has a cash reserve of $ 309.3 million, its net debt is less, at around $ 1.47 billion.

NasdaqGS: MIDD Debt to Equity History July 21, 2021

How strong is Middleby’s balance sheet?

According to the latest published balance sheet, Middleby had a liability of US $ 714.4 million due within 12 months and a liability of US $ 2.58 billion due beyond 12 months. On the other hand, it had US $ 309.3 million in cash and US $ 446.8 million in receivables due within a year. It therefore has liabilities totaling $ 2.54 billion more than its cash and short-term receivables combined.

While that might sound like a lot, it’s not so bad since Middleby has a massive market cap of US $ 10.3 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 whether it can manage its debt without dilution.

We use two main ratios to inform us about the levels of debt compared to earnings. The first is net debt divided by earnings before interest, taxes, depreciation, and amortization (EBITDA), while the second is the number of times its profit before interest and taxes (EBIT) covers its interest expense (or its coverage of interest, for short). Thus, we consider debt versus earnings with and without amortization charges.

Middleby’s debt is 2.9 times its EBITDA and its EBIT covers its interest expense 5.1 times. This suggests that while debt levels are significant, we would stop calling them problematic. Shareholders should know that Middleby’s EBIT fell 26% last year. If this earnings trend continues, paying off debt will be about as easy as driving cats on a roller coaster. The balance sheet is clearly the area you need to focus on when analyzing debt. But it is future earnings, more than anything, that will determine Middleby’s ability to maintain a healthy balance sheet going forward. 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 pay off debts; accounting profits are not enough. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Middleby has recorded free cash flow of 79% of its EBIT, which is close to normal given that free cash flow excludes interest and taxes. This hard cash allows him to reduce his debt whenever he wants.

Our point of view

From what we’ve seen, Middleby doesn’t find it easy, given its rate of EBIT growth, but the other factors we’ve taken into account give us cause for optimism. There is no doubt that its ability to convert EBIT into free cash flow is quite fast. Looking at all of this data, we feel a little cautious about Middleby’s debt levels. While debt has its advantage in terms of potential higher returns, we believe shareholders should definitely consider how leverage levels might make the stock riskier. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist off the balance sheet. Know that Middleby shows 1 warning sign in our investment analysis , you must know…

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash net growth stocks.

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Elinoil Hellenic Petroleum (ATH: ELIN) returns on capital do not reflect the activity http://goodwillsavannahga.org/elinoil-hellenic-petroleum-ath-elin-returns-on-capital-do-not-reflect-the-activity/ Tue, 20 Jul 2021 06:17:36 +0000 http://goodwillsavannahga.org/elinoil-hellenic-petroleum-ath-elin-returns-on-capital-do-not-reflect-the-activity/

If we are to find multi-bagger potential, there are often underlying trends that can provide clues. In a perfect world, we would like a business to invest more capital in their business, and ideally the returns from that capital increase as well. Put simply, these types of businesses are dialing machines, which means they continually reinvest their profits at ever higher rates of return. However, after briefly reviewing the numbers, we don’t think Elinoil Hellenic Petroleum (ATH: ELIN) has the makings of a multi-bagger in the future, but let’s see why it may be.

What is Return on Employee Capital (ROCE)?

If you’ve never worked with ROCE before, it measures the “return” (profit before tax) that a business generates on capital employed in its business. The formula for this calculation on Elinoil Hellenic Petroleum is:

Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.084 = € 7.0m ÷ (€ 182m – € 99m) (Based on the last twelve months up to December 2020).

Therefore, Elinoil Hellenic Petroleum has a ROCE of 8.4%. In absolute terms, it’s a low return, but it’s far better than the oil and gas industry average of 5.8%.

Check out our latest review for Elinoil Hellenic Petroleum

ATSE: ELIN Return on Capital Employee July 20, 2021

Although the past is not representative of the future, it can be useful to know the historical performance of a company, which is why we have this graph above. If you want to investigate more about Elinoil Hellenic Petroleum’s past, check out this free graph of past income, income and cash flow.

The ROCE trend

When we looked at the ROCE trend at Elinoil Hellenic Petroleum, we didn’t gain much confidence. To be more precise, ROCE has increased from 14% over the past five years. Considering the company is employing more capital while revenues have declined, this is a bit of a concern. If this were to continue, you might consider a business that is trying to reinvest for growth, but is actually losing market share since sales haven’t increased.

Elinoil Hellenic Petroleum’s short-term liabilities are also still quite high at 55% of total assets. This can lead to some risks as the business is essentially operating with quite a lot of dependence on its suppliers or other types of short-term creditors. Ideally, we would like this to decrease as that would mean less risky bonds.

The key to take away

In summary, we are somewhat concerned about the diminishing returns of Elinoil Hellenic Petroleum on increasing amounts of capital. Yet despite these poor fundamentals, the stock has gained a whopping 129% over the past five years, so investors are looking very bullish. Either way, we don’t feel very comfortable with the fundamentals so we’re avoiding this title for now.

If you want to know some of the risks that Elinoil Hellenic Petroleum faces, we have found 4 warning signs (2 make us uncomfortable!) Which you should be aware of before investing here.

Although Elinoil Hellenic Petroleum does not generate the highest yield, check out this free list of companies that generate high returns on equity with strong balance sheets.

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Is C. V’s Megacable Holdings SAB (BMV: MEGACPO) a risky investment? http://goodwillsavannahga.org/is-c-vs-megacable-holdings-sab-bmv-megacpo-a-risky-investment/ Mon, 19 Jul 2021 12:04:00 +0000 http://goodwillsavannahga.org/is-c-vs-megacable-holdings-sab-bmv-megacpo-a-risky-investment/

Legendary fund manager Li Lu (whom Charlie Munger supported) once said, “The biggest risk in investing is not price volatility, but the fact that you suffer a permanent loss of capital. It is 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. We notice that Megacable Holdings, SAB de CV (BMV: MEGACPO) has debt on its balance sheet. But does this debt worry shareholders?

What risk does debt entail?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are ruthlessly liquidated by their bankers. 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 look at debt levels, we first consider both liquidity and debt levels.

See our latest review for C. V’s Megacable Holdings SAB

What is the debt of Megacable Holdings SAB de C. V?

You can click on the graph below for historical figures, but it shows that C. V’s Megacable Holdings SAB had a debt of Mex 7.22 billion in March 2021, up from Mex 8.03 billion a year earlier. However, he has Mexican $ 4.83 billion in cash to make up for this, which leads to net debt of around Mexican $ 2.39 billion.

BMV: MEGA CPO History of debt to equity July 19, 2021

How healthy is the balance sheet of Megacable Holdings SAB de C. V?

We can see from the most recent balance sheet that C. V’s Megacable Holdings SAB had a liability of Mex 5.93 billion maturing within one year and a liability of Mex 9.38 billion beyond. . In return, he had Mex $ 4.83 billion in cash and Mex $ 2.27 billion in receivables due within 12 months. As a result, it has liabilities totaling Mexican $ 8.21 billion more than its cash and short-term receivables combined.

Given that C. V’s Megacable Holdings SAB has a market cap of Mexican $ 60.6 billion, it’s hard to believe that these liabilities pose a significant threat. But there are enough liabilities that we would certainly recommend that shareholders continue to monitor the balance sheet going forward.

We measure a company’s debt load relative to its earning capacity 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 costs (interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Megacable Holdings SAB de CV’s net debt is only 0.21 times its EBITDA. And its EBIT easily covers its interest costs, being 11.9 times greater. We could therefore say that he is no more threatened by his debt than an elephant is by a mouse. Fortunately, C. V’s Megacable Holdings SAB has increased its EBIT by 4.6% over the past year, making this leverage even more manageable. There is no doubt that we learn the most about debt from the balance sheet. But it is future earnings, more than anything, that will determine the ability of Megacable Holdings SAB de CV to maintain a healthy balance sheet going forward. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, a business can only pay off its debts with hard cash, not with book profits. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Megacable Holdings SAB de CV has recorded free cash flow of 50% of its EBIT, which is close to normal given that free cash flow excludes interest and taxes. This hard cash allows him to reduce his debt whenever he wants.

Our point of view

Fortunately, the impressive interest coverage of C. V’s Megacable Holdings SAB means that it has the upper hand on its debt. And this is only the beginning of the good news since its net debt to EBITDA is also very encouraging. Considering all of this data, it seems to us that C. V’s Megacable Holdings SAB is taking a pretty sane approach to debt. While this carries some risk, it can also improve returns for shareholders. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist off the balance sheet. These risks can be difficult to spot. Every business has them, and we’ve spotted 1 warning sign for Megacable Holdings SAB by C. V you should know.

At the end of the day, sometimes it’s easier to focus on businesses that don’t even need to go into debt. Readers can access a list of growth stocks with zero net debt 100% free, at present.

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Helix Energy Solutions Group (NYSE: HLX) Seeks To Continue Growing Return On Capital http://goodwillsavannahga.org/helix-energy-solutions-group-nyse-hlx-seeks-to-continue-growing-return-on-capital/ Sun, 18 Jul 2021 14:38:20 +0000 http://goodwillsavannahga.org/helix-energy-solutions-group-nyse-hlx-seeks-to-continue-growing-return-on-capital/

What are the first trends to look for to identify a title that could multiply over the long term? Generally, we will want to notice a growing trend return on capital employed (ROCE) and at the same time, a based capital employed. This shows us that it is a composing machine, capable of continually reinvesting its profits in the business and generating higher returns. With that in mind, we’ve noticed some promising trends at Helix Energy Solutions Group (NYSE: HLX) so let’s look a little deeper.

Understanding Return on Capital Employed (ROCE)

For those who don’t know what ROCE is, it measures the amount of pre-tax profit a business can generate from the capital employed in its business. Analysts use this formula to calculate it for Helix Energy Solutions Group:

Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.015 = US $ 33 million ÷ (US $ 2.4 billion – US $ 218 million) (Based on the last twelve months up to March 2021).

Therefore, Helix Energy Solutions Group has a ROCE of 1.5%. At the end of the day, that’s a low efficiency and it is below the energy services industry average of 5.0%.

See our latest review for Helix Energy Solutions Group

NYSE: HLX Return on capital employed on July 18, 2021

In the graph above, we measured Helix Energy Solutions Group’s past ROCE against its past performance, but the future is arguably more important. If you are interested, you can view analyst forecasts in our free analyst forecast report for the company.

So what is the ROCE trend for Helix Energy Solutions group?

While there are companies with higher returns on capital, we still find the trend at Helix Energy Solutions Group promising. Figures show that over the past five years, ROCE has increased by 4.522% while using roughly the same amount of capital. So our view is that the business has increased its efficiency to generate these higher returns, while not needing to make additional investments. On this front, things are looking good, so it’s worth exploring what management has said about growth plans going forward.

Our opinion on the ROCE of Helix Energy Solutions Group

To put it all together, Helix Energy Solutions Group has done well to increase the returns it generates on its capital employed. Given that the stock has fallen 44% over the past five years, this could be a good investment if valuation and other metrics are attractive as well. With that in mind, we believe the promising trends warrant further investigation of this stock.

One more thing, we spotted 3 warning signs facing Helix Energy Solutions Group that you might find interesting.

While Helix Energy Solutions Group does not currently generate the highest returns, we have compiled a list of companies that currently generate over 25% return on equity. Check it out free list here.

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Is Dominion Energy (NYSE: D) Using Too Much Debt? http://goodwillsavannahga.org/is-dominion-energy-nyse-d-using-too-much-debt/ Sat, 17 Jul 2021 14:30:36 +0000 http://goodwillsavannahga.org/is-dominion-energy-nyse-d-using-too-much-debt/

Warren Buffett said: “Volatility is far from synonymous with risk”. It is 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. Like many other companies Dominion Energy, Inc. (NYSE: D) uses debt. But the most important question is: what risk does this debt create?

When is debt dangerous?

Debt helps a business until the business struggles to repay it, either with new capital or with free cash flow. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. 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.

Check out our latest review for Dominion Energy

What is Dominion Energy’s debt?

As you can see below, Dominion Energy had $ 38.0 billion in debt in March 2021, up from $ 41.2 billion the year before. And he doesn’t have a lot of cash, so his net debt is about the same.

NYSE: D History of Debt to Equity July 17, 2021

How strong is Dominion Energy’s balance sheet?

The latest balance sheet data shows Dominion Energy had US $ 11.8 billion in liabilities due within one year, and US $ 57.8 billion in liabilities due thereafter. On the other hand, he had $ 477.0 million in cash and $ 2.08 billion in receivables due within a year. It therefore has liabilities totaling US $ 67.1 billion more than its cash and short-term receivables combined.

Given that this deficit is actually greater than the company’s massive market cap of $ 62.2 billion, we think shareholders should really watch Dominion Energy’s debt levels, like a parent watching their child. riding a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely that shareholders would suffer a significant 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). Thus, we consider debt versus earnings with and without amortization charges.

Dominion Energy has a rather high debt-to-EBITDA ratio of 5.9, which suggests significant leverage. But the good news is that he enjoys a pretty comforting 2.6x interest coverage, which suggests he can meet his obligations responsibly. Another concern for investors could be that Dominion Energy’s EBIT has fallen 14% in the past year. If things continue like this, managing the debt will be about as easy as putting an angry house cat in its travel box. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future earnings, more than anything, that will determine Dominion Energy’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 can only pay off its debts with hard cash, not with book profits. It is therefore worth checking to what extent this EBIT is supported by free cash flow. Over the past three years, Dominion Energy has experienced total negative free cash flow. Debt is much riskier for companies with unreliable free cash flow, so shareholders should hope that past spending will produce free cash flow in the future.

Our point of view

At first glance, Dominion Energy’s conversion of EBIT to free cash flow left us hesitant about the stock, and its net debt to EBITDA was no more attractive than the only restaurant that was empty the night before. busiest of the year. And what’s more, his interest coverage fails to inspire confidence either. It should also be noted that companies in the integrated utility sector like Dominion Energy generally use debt without a problem. After looking at the data points discussed, we believe Dominion Energy has too much debt. This kind of risk is acceptable to some, but it certainly does not float our boat. 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. To this end, you should inquire about the 2 warning signs we spotted with Dominion Energy (including 1 that should not be overlooked).

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.

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This Simply Wall St article is general in nature. 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.
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Victoria Oil & Gas (LON: VOG) could have the makings of a multi-bagger http://goodwillsavannahga.org/victoria-oil-gas-lon-vog-could-have-the-makings-of-a-multi-bagger/ Thu, 15 Jul 2021 08:50:39 +0000 http://goodwillsavannahga.org/victoria-oil-gas-lon-vog-could-have-the-makings-of-a-multi-bagger/

What trends should we look for if we are to identify stocks that can multiply in value over the long term? In a perfect world, we would like a business to invest more capital in their business, and ideally the returns from that capital increase as well. Put simply, these types of businesses are dialing machines, which means they continually reinvest their profits at ever higher rates of return. So on that note, Victoria Oil and Gas (LON: VOG) looks pretty promising when it comes to its ROI trends.

Understanding Return on Capital Employed (ROCE)

Just to clarify if you’re not sure, ROCE is a measure of the pre-tax income (as a percentage) that a business earns on the capital invested in its business. Analysts use this formula to calculate it for Victoria Oil & Gas:

Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.05 = $ 963,000 ÷ ($ 51 million – $ 32 million) (Based on the last twelve months up to December 2020).

Therefore, Victoria Oil & Gas has a ROCE of 5.0%. In absolute terms, that’s a poor return, but it’s way better than the oil and gas industry average of 4.0%.

See our latest analysis for Victoria Oil & Gas

OBJECTIVE: VOG Review of capital employed July 15, 2021

Historical performance is a great place to start when looking for a stock. So above you can see the gauge of Victoria Oil & Gas’s ROCE compared to its past yields. If you want to learn more about Victoria Oil & Gas’s past, check out this free graph of past income, income and cash flow.

What does the ROCE trend tell us for Victoria Oil & Gas?

We are delighted to see that Victoria Oil & Gas is reaping the benefits of its investments and has now returned to profitability. Historically, the company generated losses but as shown by the latest figures referenced above, it now earns 5.0% on its capital employed. When it comes to capital employed, Victoria Oil & Gas is using 86% less capital than five years ago, which at first glance may indicate that the company has become more efficient at generating these returns. Victoria Oil & Gas could sell underperforming assets as ROCE improves.

For the record, there was a noticeable increase in the company’s current liabilities over the period, so we would attribute some of the ROCE growth to that. Basically, the business now has short-term suppliers or creditors funding about 62% of its operations, which is not ideal. Given its fairly high ratio, we remind investors that short-term liabilities at these levels can lead to certain risks in some companies.

In conclusion…

In summary, it’s great to see that Victoria Oil & Gas was able to turn the tide and earn higher returns on lower amounts of capital. However, the stock has fallen 88% in the past five years, so other areas of the company could hurt its outlook. Either way, we believe the underlying fundamentals warrant this stock for further investigation.

If you want to know some of the risks Victoria Oil & Gas faces that we have found 3 warning signs (1 makes us a little uncomfortable!) Which you should be aware of before investing here.

Although Victoria Oil & Gas does not currently generate the highest returns, we have compiled a list of companies that currently generate over 25% return on equity. Check it out free list here.

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This Simply Wall St article is general in nature. 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.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020

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Is BIOLASE (NASDAQ: BIOL) Using Debt Wisely? http://goodwillsavannahga.org/is-biolase-nasdaq-biol-using-debt-wisely/ Wed, 14 Jul 2021 10:14:21 +0000 http://goodwillsavannahga.org/is-biolase-nasdaq-biol-using-debt-wisely/

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 BIOLASE, Inc. (NASDAQ: BIOL) uses debt. But the most important question is: what risk does this debt create?

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. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, constantly diluting shareholders, just to strengthen its balance sheet. Of course, debt can be an important tool in businesses, especially capital intensive businesses. When we look at debt levels, we first consider both liquidity and debt levels.

See our latest analysis for BIOLASE

What is BIOLASE’s debt?

The image below, which you can click for more details, shows that in March 2021, BIOLASE had a debt of US $ 16.3 million, compared to US $ 13.6 million in one year. However, it has $ 40.8 million in cash offsetting that, which leads to a net cash of $ 24.5 million.

NasdaqCM: BIOL History of debt to equity July 14, 2021

How strong is BIOLASE’s balance sheet?

We can see from the most recent balance sheet that BIOLASE had debts of $ 11.3 million due within one year, and debts of $ 18.7 million due beyond. . On the other hand, he had $ 40.8 million in cash and $ 3.27 million in receivables due within a year. So he actually has $ 14.1 million After liquid assets as total liabilities.

This excess liquidity suggests that BIOLASE is taking a cautious approach to debt. Due to its strong net asset position, it should not encounter any problems with its lenders. In short, BIOLASE has a net cash flow, so it is fair to say that it does not have a heavy debt load! 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 BIOLASE’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 Profit Forecast report interesting.

Over 12 months, BIOLASE recorded a loss in EBIT, and saw its turnover fall to US $ 26 million, a decrease of 19%. We would much prefer to see the growth.

So how risky is BIOLASE?

By their very nature, businesses that lose money are riskier than those with a long history of profitability. And the point is that over the last twelve months, BIOLASE has lost money in earnings before interest and taxes (EBIT). Indeed, during that period, he burned $ 15 million in cash and recorded a loss of $ 36 million. Given that it only has $ 24.5 million in net cash, the company may need to raise more capital if it doesn’t break even soon. Even if its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company does not produce regular free cash flow. The balance sheet is clearly the area you need to focus on when analyzing debt. However, not all investment risks lie on the balance sheet – far from it. We have identified 4 warning signs with BIOLASE (at least 1 which is a bit unpleasant), and understanding them should be part of your investment process.

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.

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This Simply Wall St article is general in nature. 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.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020

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Is Thule Group (STO: THULE) a risky investment? http://goodwillsavannahga.org/is-thule-group-sto-thule-a-risky-investment/ Sun, 11 Jul 2021 07:32:44 +0000 http://goodwillsavannahga.org/is-thule-group-sto-thule-a-risky-investment/

Warren Buffett said: “Volatility is far from synonymous with 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. Mostly, Thule Group AB (released) (STO: THULE) is in debt. But the most important question is: what risk does this debt create?

When is debt dangerous?

Debt and other liabilities become risky for a business when it cannot easily meet these obligations, either with free cash flow or by raising capital at an attractive price. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are ruthlessly liquidated by their bankers. 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, many companies use debt to finance their growth without negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash flow and debt together.

Check out our latest analysis for Thule Group

What is the debt of the Thule group?

The image below, which you can click for more details, shows that Thule Group had debt of SEK 944.0 million at the end of March 2021, a reduction from SEK 3.15 billion on a year. However, it has 708.0 million kr in cash offsetting this, which leads to a net debt of around 236.0 million kr.

History of OM’s debt on equity: THULE July 11, 2021

A look at the responsibilities of the Thule group

We can see from the most recent balance sheet that Thule Group had liabilities of NOK 2.00 billion due within one year, and liabilities of SEK 1.64 billion due beyond. On the other hand, he had cash of 708.0 million crowns and receivables worth 1.61 billion crowns within a year. Thus, its liabilities exceed the sum of its cash and (short-term) receivables by 1.31 billion kroner.

Given that Thule Group has a market cap of kr41.1b, it is hard to believe that these liabilities pose a big threat. However, we think it’s worth keeping an eye on the strength of its balance sheet as it can change over time. With virtually no net debt, Thule Group has very low debt.

We use two main ratios to inform us about the levels of debt compared to earnings. The first is net debt divided by earnings before interest, taxes, depreciation, and amortization (EBITDA), while the second is the number of times its profit before interest and taxes (EBIT) covers its interest expense (or its coverage of interest, for short). The advantage of this approach is that we take into account both the absolute amount of debt (with net debt versus EBITDA) and the actual interest charges associated with this debt (with its coverage rate). interests).

Thule Group has a low net debt to EBITDA ratio of just 0.12. And its EBIT easily covers its interest costs, being 50.2 times higher. We could therefore say that he is no more threatened by his debt than an elephant is by a mouse. On top of that, Thule Group has increased its EBIT by 58% over the past twelve months, and this growth will make it easier to process its debt. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future profits, more than anything, that will determine Thule Group’s ability to maintain a healthy balance sheet going forward. 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 therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Thule Group has recorded free cash flow of 71% 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

Fortunately, the Thule Group’s impressive interest coverage means it has the upper hand on its debt. And that’s just the start of the good news as its EBIT growth rate is also very encouraging. We believe that Thule Group owes no more to its lenders than the birds are to bird watchers. In our opinion, he has a healthy and happy track record. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks lie on the balance sheet – far from it. We have identified 2 warning signs with Thule Group and understanding them should be part of your investment process.

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 growth stocks today.

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If you decide to trade with Thule 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.

This Simply Wall St article is general in nature. 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 material. Simply Wall St has no position in the mentioned stocks.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020

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