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)曾説過一句名言:波動性遠非風險的代名詞。當你考察一家公司的風險有多大時,考慮它的資產負債表是很自然的,因為當一家企業倒閉時,債務往往會涉及到它。重要的是南京翰瑞鈷業有限公司。(SZSE:300618)確實有債務。但這筆債務對股東來説是一個擔憂嗎?
債務在什麼時候是危險的?
債務幫助企業,直到企業難以償還債務,無論是用新資本還是用自由現金流。最終,如果公司不能履行其償還債務的法定義務,股東可能會一無所有地離開。儘管這並不常見,但我們確實經常看到負債累累的公司永久性地稀釋股東的權益,因為貸款人迫使他們以令人沮喪的價格籌集資金。當然,在企業中,債務可以是一個重要的工具,特別是資本密集型企業。當我們考慮一家公司的債務用途時,我們首先會把現金和債務放在一起看。
查看我們對南京漢瑞科博特有限公司的最新分析
南京漢瑞科技有限公司的債務是什麼?
你可以點擊查看更多詳細信息的下圖顯示,截至2022年3月,南京漢瑞股份有限公司的債務為24.7億元人民幣,而一年內的債務為8.513億元人民幣。然而,由於擁有23.3億加元的現金儲備,其淨債務較少,約為1.376億加元。
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-12426123-0-845cee4a1e51a85540aac20aff36cebc.png/big)
深交所:300618債轉股歷史2022年7月13日
南京漢瑞股份有限公司的資產負債表健康程度如何?
從最近的資產負債表我們可以看到,南京漢瑞股份有限公司有35億元人民幣的負債在一年內到期,還有3.674億元的負債在一年內到期。作為抵消,它有23.3億加元的現金和11.億加元的應收賬款在12個月內到期。因此,其負債比現金和(近期)應收賬款之和高出4.35億加元。
由於上市的南京漢瑞股份有限公司的股票總價值為178億元人民幣,這樣的負債水平似乎不太可能構成重大威脅。然而,我們確實認為值得關注其資產負債表的實力,因為它可能會隨着時間的推移而變化。南京漢瑞股份有限公司幾乎沒有淨債務,債務負擔確實非常輕。
我們使用兩個主要比率來告知我們債務相對於收益的水平。第一個是淨債務除以利息、税項、折舊和攤銷前收益(EBITDA),第二個是其息税前收益(EBIT)覆蓋其利息支出(或簡稱利息覆蓋)的多少倍。因此,我們考慮債務相對於收益,包括折舊和攤銷費用。
南京漢瑞股份有限公司的淨債務與EBITDA之比較低,僅為0.12。它的息税前利潤比利息支出高出1000倍。因此,你可以辯稱,它不會受到債務的威脅,就像大象受到老鼠的威脅一樣。此外,我們很高興地報告,南京漢瑞股份有限公司已將其息税前利潤提高了98%,從而降低了未來償還債務的幽靈。當你分析債務時,資產負債表顯然是你關注的領域。但你不能完全孤立地看待債務,因為南京漢瑞股份有限公司需要盈利來償還債務。因此,當考慮債務時,絕對值得關注收益趨勢。點擊此處查看互動快照。
但我們的最後考慮也很重要,因為一家公司不能用賬面利潤來償還債務;它需要冷硬現金。因此,我們顯然需要看看息税前利潤是否會帶來相應的自由現金流。在過去的三年裏,南京漢瑞股份有限公司燒掉了大量的現金。儘管投資者無疑預計這種情況會在適當的時候逆轉,但這顯然意味着它使用債務的風險更大。
我們的觀點
令人高興的是,南京漢瑞股份有限公司令人印象深刻的利息覆蓋率意味着它在債務上佔據了上風。但我們必須承認,我們發現它將息税前利潤轉換為自由現金流產生了相反的效果。當我們考慮上述因素時,南京漢瑞股份有限公司的債務使用似乎相當明智。這意味着他們正在承擔更多的風險,希望提高股東回報。在分析債務水平時,資產負債表顯然是一個起點。但歸根結底,每家公司都可能包含存在於資產負債表之外的風險。一個恰當的例子:我們發現了南京漢瑞科博特有限公司的2個警示標誌你應該意識到,其中有一個是不應該被忽視的。
如果你對一家增長迅速、資產負債表堅如磐石的公司更感興趣,那麼請立即查看我們的淨現金成長型股票清單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。