The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that Yantai Changyu Pioneer Wine Company Limited (SZSE:200869) does use debt in its business. But is this debt a concern to shareholders?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.
See our latest analysis for Yantai Changyu Pioneer Wine
What Is Yantai Changyu Pioneer Wine's Net Debt?
As you can see below, Yantai Changyu Pioneer Wine had CN¥713.0m of debt at June 2022, down from CN¥1.01b a year prior. But it also has CN¥1.90b in cash to offset that, meaning it has CN¥1.19b net cash.
SZSE:200869 Debt to Equity History September 26th 2022
How Healthy Is Yantai Changyu Pioneer Wine's Balance Sheet?
We can see from the most recent balance sheet that Yantai Changyu Pioneer Wine had liabilities of CN¥2.23b falling due within a year, and liabilities of CN¥336.3m due beyond that. On the other hand, it had cash of CN¥1.90b and CN¥531.1m worth of receivables due within a year. So it has liabilities totalling CN¥133.4m more than its cash and near-term receivables, combined.
Having regard to Yantai Changyu Pioneer Wine's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the CN¥15.3b company is struggling for cash, we still think it's worth monitoring its balance sheet. While it does have liabilities worth noting, Yantai Changyu Pioneer Wine also has more cash than debt, so we're pretty confident it can manage its debt safely.
On the other hand, Yantai Changyu Pioneer Wine saw its EBIT drop by 2.5% in the last twelve months. If earnings continue to decline at that rate the company may have increasing difficulty managing its debt load. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Yantai Changyu Pioneer Wine's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Yantai Changyu Pioneer Wine has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the most recent three years, Yantai Changyu Pioneer Wine recorded free cash flow worth 78% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.
Summing Up
While it is always sensible to look at a company's total liabilities, it is very reassuring that Yantai Changyu Pioneer Wine has CN¥1.19b in net cash. The cherry on top was that in converted 78% of that EBIT to free cash flow, bringing in CN¥1.1b. So we don't think Yantai Changyu Pioneer Wine's use of debt is risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Yantai Changyu Pioneer Wine you should know about.
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
伯克希尔哈撒韦的外部基金经理理想汽车·卢直言不讳地说,最大的投资风险不是价格的波动,而是你是否会遭受永久性的资本损失。因此,当你评估一家公司的风险有多大时,聪明的投资者似乎知道债务--通常涉及破产--是一个非常重要的因素。我们可以看到烟台张裕先锋酒业有限公司(SZSE:200869)确实在其业务中使用债务。但这笔债务对股东来说是一个担忧吗?
什么时候债务是个问题?
一般来说,只有当一家公司无法轻松偿还债务时,债务才会成为一个真正的问题,无论是通过筹集资金还是用自己的现金流。在最糟糕的情况下,如果一家公司无法偿还债权人的债务,它可能会破产。然而,更常见(但代价仍然高昂)的情况是,一家公司必须以极低的价格发行股票,永久性地稀释股东的股份,只是为了支撑其资产负债表。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。在考虑一家公司的债务水平时,第一步是同时考虑其现金和债务。
请看我们对烟台张裕先锋葡萄酒的最新分析
烟台张裕先锋酒的净负债是多少?
如下所示,截至2022年6月,烟台张裕先锋葡萄酒的债务为7.13亿元人民币,低于一年前的10.1亿元人民币。但它也有人民币19.亿元的现金来抵消,这意味着它有人民币11.9亿元的净现金。
深圳证交所:200869债转股历史2022年9月26日
烟台张裕先锋酒的资产负债表有多健康?
从最新的资产负债表中我们可以看到,烟台张裕先锋葡萄酒有22.3亿元的负债在一年内到期,还有3.363亿元的负债在一年内到期。另一方面,它还有19.0亿加元的现金和5.311亿加元的应收账款在一年内到期。因此,它的负债总额比现金和近期应收账款加起来还要多1.334亿元。
考虑到烟台张裕先锋葡萄酒的规模,其流动资产与总负债似乎得到了很好的平衡。因此,尽管很难想象这家人民币153亿元的公司正在苦苦挣扎,但我们仍然认为值得监控其资产负债表。虽然它确实有值得注意的负债,但烟台张裕先锋葡萄酒也有更多的现金而不是债务,所以我们非常有信心它能够安全地管理债务。
另一方面,烟台张裕先锋葡萄酒在过去12个月中息税前利润下降了2.5%。如果收益继续以这样的速度下降,该公司管理债务负担的难度可能会越来越大。毫无疑问,我们从资产负债表中了解到的债务最多。但决定烟台张裕先锋葡萄酒未来保持健康资产负债表的能力,最重要的是未来的收益。所以,如果你关注未来,你可以看看这个免费显示分析师利润预测的报告。
最后,尽管税务人员可能喜欢会计利润,但贷款人只接受冷硬现金。虽然烟台张裕先锋葡萄酒的资产负债表上有净现金,但它将息税前利润(EBIT)转换为自由现金流的能力仍然值得一看,以帮助我们了解它正在以多快的速度建立(或侵蚀)现金余额。在最近三年中,烟台张裕先锋葡萄酒录得的自由现金流相当于其息税前利润的78%,考虑到自由现金流不包括利息和税收,这一数字接近正常水平。这种冷酷的现金意味着,它可以在想要的时候减少债务。
总结
虽然看一家公司的总负债总是明智的,但令人欣慰的是,烟台张裕先锋葡萄酒拥有11.9亿元人民币的净现金。上面的樱桃是IN将78%的息税前利润转换为自由现金流,带来11亿元人民币。因此,我们不认为烟台张裕先锋葡萄酒使用债务是有风险的。当你分析债务时,资产负债表显然是你关注的领域。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。这些风险可能很难发现。每家公司都有它们,我们已经发现1个烟台张裕先锋酒警示标志你应该知道。
当然,如果你是那种喜欢在没有债务负担的情况下购买股票的投资者,那么不要犹豫,今天就来看看我们的净现金成长型股票独家名单。
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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。