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.
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-15063451-0-e7d0b52fda34a2f3027c7d65eddda43d.png/big)
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.
伯克希爾哈撒韋的外部基金經理理想汽車·盧直言不諱地説,最大的投資風險不是價格的波動,而是你是否會遭受永久性的資本損失。因此,當你評估一家公司的風險有多大時,聰明的投資者似乎知道債務--通常涉及破產--是一個非常重要的因素。我們可以看到煙臺張裕先鋒酒業有限公司(SZSE:200869)確實在其業務中使用債務。但這筆債務對股東來説是一個擔憂嗎?
什麼時候債務是個問題?
一般來説,只有當一家公司無法輕鬆償還債務時,債務才會成為一個真正的問題,無論是通過籌集資金還是用自己的現金流。在最糟糕的情況下,如果一家公司無法償還債權人的債務,它可能會破產。然而,更常見(但代價仍然高昂)的情況是,一家公司必須以極低的價格發行股票,永久性地稀釋股東的股份,只是為了支撐其資產負債表。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。在考慮一家公司的債務水平時,第一步是同時考慮其現金和債務。
請看我們對煙臺張裕先鋒葡萄酒的最新分析
煙臺張裕先鋒酒的淨負債是多少?
如下所示,截至2022年6月,煙臺張裕先鋒葡萄酒的債務為7.13億元人民幣,低於一年前的10.1億元人民幣。但它也有人民幣19.億元的現金來抵消,這意味着它有人民幣11.9億元的淨現金。
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-15063451-0-e7d0b52fda34a2f3027c7d65eddda43d.png/big)
深圳證交所:200869債轉股歷史2022年9月26日
煙臺張裕先鋒酒的資產負債表有多健康?
從最新的資產負債表中我們可以看到,煙臺張裕先鋒葡萄酒有22.3億元的負債在一年內到期,還有3.363億元的負債在一年內到期。另一方面,它還有19.0億加元的現金和5.311億加元的應收賬款在一年內到期。因此,它的負債總額比現金和近期應收賬款加起來還要多1.334億元。
考慮到煙臺張裕先鋒葡萄酒的規模,其流動資產與總負債似乎得到了很好的平衡。因此,儘管很難想象這家人民幣153億元的公司正在苦苦掙扎,但我們仍然認為值得監控其資產負債表。雖然它確實有值得注意的負債,但煙臺張裕先鋒葡萄酒也有更多的現金而不是債務,所以我們非常有信心它能夠安全地管理債務。
另一方面,煙臺張裕先鋒葡萄酒在過去12個月中息税前利潤下降了2.5%。如果收益繼續以這樣的速度下降,該公司管理債務負擔的難度可能會越來越大。毫無疑問,我們從資產負債表中瞭解到的債務最多。但決定煙臺張裕先鋒葡萄酒未來保持健康資產負債表的能力,最重要的是未來的收益。所以,如果你關注未來,你可以看看這個免費顯示分析師利潤預測的報告。
最後,儘管税務人員可能喜歡會計利潤,但貸款人只接受冷硬現金。雖然煙臺張裕先鋒葡萄酒的資產負債表上有淨現金,但它將息税前利潤(EBIT)轉換為自由現金流的能力仍然值得一看,以幫助我們瞭解它正在以多快的速度建立(或侵蝕)現金餘額。在最近三年中,煙臺張裕先鋒葡萄酒錄得的自由現金流相當於其息税前利潤的78%,考慮到自由現金流不包括利息和税收,這一數字接近正常水平。這種冷酷的現金意味着,它可以在想要的時候減少債務。
總結
雖然看一家公司的總負債總是明智的,但令人欣慰的是,煙臺張裕先鋒葡萄酒擁有11.9億元人民幣的淨現金。上面的櫻桃是IN將78%的息税前利潤轉換為自由現金流,帶來11億元人民幣。因此,我們不認為煙臺張裕先鋒葡萄酒使用債務是有風險的。當你分析債務時,資產負債表顯然是你關注的領域。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。這些風險可能很難發現。每家公司都有它們,我們已經發現1個煙臺張裕先鋒酒警示標誌你應該知道。
當然,如果你是那種喜歡在沒有債務負擔的情況下購買股票的投資者,那麼不要猶豫,今天就來看看我們的淨現金成長型股票獨家名單。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
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。