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.' 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. We can see that CSMall Group Limited (HKG:1815) does use debt in its business. But is this debt a concern to shareholders?
What Risk Does Debt Bring?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.
View our latest analysis for CSMall Group
How Much Debt Does CSMall Group Carry?
The image below, which you can click on for greater detail, shows that at June 2022 CSMall Group had debt of CN¥100.7m, up from CN¥12.9m in one year. However, it does have CN¥379.4m in cash offsetting this, leading to net cash of CN¥278.7m.
SEHK:1815 Debt to Equity History December 9th 2022
How Strong Is CSMall Group's Balance Sheet?
According to the last reported balance sheet, CSMall Group had liabilities of CN¥230.0m due within 12 months, and liabilities of CN¥3.46m due beyond 12 months. Offsetting this, it had CN¥379.4m in cash and CN¥100.2m in receivables that were due within 12 months. So it actually has CN¥246.2m more liquid assets than total liabilities.
This surplus liquidity suggests that CSMall Group's balance sheet could take a hit just as well as Homer Simpson's head can take a punch. Having regard to this fact, we think its balance sheet is as strong as an ox. Simply put, the fact that CSMall Group has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is CSMall Group's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.
In the last year CSMall Group wasn't profitable at an EBIT level, but managed to grow its revenue by 184%, to CN¥987m. So its pretty obvious shareholders are hoping for more growth!
So How Risky Is CSMall Group?
While CSMall Group lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow CN¥268m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. We think its revenue growth of 184% is a good sign. We'd see further strong growth as an optimistic indication. 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. We've identified 2 warning signs with CSMall Group (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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.
由伯克希尔哈撒韦的Li·芒格支持的外部基金经理Lu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。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。我们可以看到中信商城集团有限公司(HKG：1815)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？
债务会带来什么风险？
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。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，一种更常见(但仍然昂贵)的情况是，一家公司必须以低廉的股价稀释股东的股份，才能控制债务。话虽如此，最常见的情况是一家公司对债务管理得相当好--并对自己有利。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。
查看我们对CSMall集团的最新分析
CSMall集团背负着多少债务？
下图显示，截至2022年6月，CSMall集团的债务为1.007亿加元，高于一年内的1290万加元。你可以点击查看更多细节。然而，它确实有3.794亿加元的现金抵消了这一点，导致净现金为2.787亿加元。
联交所：1815债转股历史2022年12月9日
CSMall集团的资产负债表有多强劲？
根据最近一次报告的资产负债表，CSMall集团有2.30亿加元的负债在12个月内到期，346万加元的负债在12个月后到期。作为抵消，它有3.794亿加元的现金和1.002亿加元的应收账款在12个月内到期。所以它实际上有2.462亿元人民币更多流动资产超过总负债。
这种过剩的流动性表明，CSMall Group的资产负债表可能会受到打击，就像霍默·辛普森(Hmer Simpson)的头可能受到打击一样。考虑到这一事实，我们认为它的资产负债表像牛一样坚固。简而言之，CSMall Group的现金多于债务这一事实可以说是一个很好的迹象，表明它能够安全地管理债务。毫无疑问，我们从资产负债表中了解到的债务最多。但CSMall集团的盈利将影响未来资产负债表的表现。因此，如果你热衷于了解更多关于它的收益，可能值得查看一下它的长期收益趋势图。
去年，CSMall Group没有实现息税前利润，但其收入增长了184%，达到人民币9.87亿元。因此，很明显，它的股东们希望有更多的增长！
那么，CSMall集团的风险有多大？
虽然CSMall集团在息税前收益(EBIT)水平上亏损，但它实际上产生了正的自由现金流人民币2.68亿元。因此，尽管它在亏损，但考虑到净现金，它似乎没有太大的近期资产负债表风险。我们认为其收入增长184%是一个好兆头。我们会认为进一步强劲的增长是一个乐观的迹象。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。我们已经确定了两个警告信号与CSMall Group合作(至少1个不可忽视)，了解他们应该是你投资过程的一部分。
如果你有兴趣投资于可以在没有债务负担的情况下增长利润的企业，那么看看这个免费资产负债表上有净现金的成长型企业名单。
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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。
