Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Nanjing Hanrui Cobalt Co.,Ltd. (SZSE:300618) does carry debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.
Check out our latest analysis for Nanjing Hanrui CobaltLtd
What Is Nanjing Hanrui CobaltLtd's Debt?
The image below, which you can click on for greater detail, shows that at March 2022 Nanjing Hanrui CobaltLtd had debt of CN¥2.47b, up from CN¥851.3m in one year. However, because it has a cash reserve of CN¥2.33b, its net debt is less, at about CN¥137.6m.
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-12426123-0-845cee4a1e51a85540aac20aff36cebc.png/big)
SZSE:300618 Debt to Equity History July 13th 2022
How Healthy Is Nanjing Hanrui CobaltLtd's Balance Sheet?
We can see from the most recent balance sheet that Nanjing Hanrui CobaltLtd had liabilities of CN¥3.50b falling due within a year, and liabilities of CN¥367.4m due beyond that. Offsetting this, it had CN¥2.33b in cash and CN¥1.10b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥435.0m.
Since publicly traded Nanjing Hanrui CobaltLtd shares are worth a total of CN¥17.8b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Carrying virtually no net debt, Nanjing Hanrui CobaltLtd has a very light debt load indeed.
We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
Nanjing Hanrui CobaltLtd has a low net debt to EBITDA ratio of only 0.12. And its EBIT covers its interest expense a whopping 1k times over. So you could argue it is no more threatened by its debt than an elephant is by a mouse. In addition to that, we're happy to report that Nanjing Hanrui CobaltLtd has boosted its EBIT by 98%, thus reducing the spectre of future debt repayments. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Nanjing Hanrui CobaltLtd will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. During the last three years, Nanjing Hanrui CobaltLtd burned a lot of cash. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.
Our View
Happily, Nanjing Hanrui CobaltLtd's impressive interest cover implies it has the upper hand on its debt. But we must concede we find its conversion of EBIT to free cash flow has the opposite effect. When we consider the range of factors above, it looks like Nanjing Hanrui CobaltLtd is pretty sensible with its use of debt. That means they are taking on a bit more risk, in the hope of boosting shareholder returns. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 2 warning signs for Nanjing Hanrui CobaltLtd you should be aware of, and 1 of them shouldn't be ignored.
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
巴菲特(Warren Buffett)曾说过一句名言:波动性远非风险的代名词。当你考察一家公司的风险有多大时,考虑它的资产负债表是很自然的,因为当一家企业倒闭时,债务往往会涉及到它。重要的是南京翰瑞钴业有限公司。(SZSE:300618)确实有债务。但这笔债务对股东来说是一个担忧吗?
债务在什么时候是危险的?
债务帮助企业,直到企业难以偿还债务,无论是用新资本还是用自由现金流。最终,如果公司不能履行其偿还债务的法定义务,股东可能会一无所有地离开。尽管这并不常见,但我们确实经常看到负债累累的公司永久性地稀释股东的权益,因为贷款人迫使他们以令人沮丧的价格筹集资金。当然,在企业中,债务可以是一个重要的工具,特别是资本密集型企业。当我们考虑一家公司的债务用途时,我们首先会把现金和债务放在一起看。
查看我们对南京汉瑞科博特有限公司的最新分析
南京汉瑞科技有限公司的债务是什么?
你可以点击查看更多详细信息的下图显示,截至2022年3月,南京汉瑞股份有限公司的债务为24.7亿元人民币,而一年内的债务为8.513亿元人民币。然而,由于拥有23.3亿加元的现金储备,其净债务较少,约为1.376亿加元。
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-12426123-0-845cee4a1e51a85540aac20aff36cebc.png/big)
深交所:300618债转股历史2022年7月13日
南京汉瑞股份有限公司的资产负债表健康程度如何?
从最近的资产负债表我们可以看到,南京汉瑞股份有限公司有35亿元人民币的负债在一年内到期,还有3.674亿元的负债在一年内到期。作为抵消,它有23.3亿加元的现金和11.亿加元的应收账款在12个月内到期。因此,其负债比现金和(近期)应收账款之和高出4.35亿加元。
由于上市的南京汉瑞股份有限公司的股票总价值为178亿元人民币,这样的负债水平似乎不太可能构成重大威胁。然而,我们确实认为值得关注其资产负债表的实力,因为它可能会随着时间的推移而变化。南京汉瑞股份有限公司几乎没有净债务,债务负担确实非常轻。
我们使用两个主要比率来告知我们债务相对于收益的水平。第一个是净债务除以利息、税项、折旧和摊销前收益(EBITDA),第二个是其息税前收益(EBIT)覆盖其利息支出(或简称利息覆盖)的多少倍。因此,我们考虑债务相对于收益,包括折旧和摊销费用。
南京汉瑞股份有限公司的净债务与EBITDA之比较低,仅为0.12。它的息税前利润比利息支出高出1000倍。因此,你可以辩称,它不会受到债务的威胁,就像大象受到老鼠的威胁一样。此外,我们很高兴地报告,南京汉瑞股份有限公司已将其息税前利润提高了98%,从而降低了未来偿还债务的幽灵。当你分析债务时,资产负债表显然是你关注的领域。但你不能完全孤立地看待债务,因为南京汉瑞股份有限公司需要盈利来偿还债务。因此,当考虑债务时,绝对值得关注收益趋势。点击此处查看互动快照。
但我们的最后考虑也很重要,因为一家公司不能用账面利润来偿还债务;它需要冷硬现金。因此,我们显然需要看看息税前利润是否会带来相应的自由现金流。在过去的三年里,南京汉瑞股份有限公司烧掉了大量的现金。尽管投资者无疑预计这种情况会在适当的时候逆转,但这显然意味着它使用债务的风险更大。
我们的观点
令人高兴的是,南京汉瑞股份有限公司令人印象深刻的利息覆盖率意味着它在债务上占据了上风。但我们必须承认,我们发现它将息税前利润转换为自由现金流产生了相反的效果。当我们考虑上述因素时,南京汉瑞股份有限公司的债务使用似乎相当明智。这意味着他们正在承担更多的风险,希望提高股东回报。在分析债务水平时,资产负债表显然是一个起点。但归根结底,每家公司都可能包含存在于资产负债表之外的风险。一个恰当的例子:我们发现了南京汉瑞科博特有限公司的2个警示标志你应该意识到,其中有一个是不应该被忽视的。
如果你对一家增长迅速、资产负债表坚如磐石的公司更感兴趣,那么请立即查看我们的净现金成长型股票清单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。