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, Urovo Technology Co., Ltd. (SZSE:300531) does carry debt. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.
View our latest analysis for Urovo Technology
What Is Urovo Technology's Debt?
The chart below, which you can click on for greater detail, shows that Urovo Technology had CN¥297.1m in debt in June 2022; about the same as the year before. But on the other hand it also has CN¥625.4m in cash, leading to a CN¥328.3m net cash position.
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-15759934-0-1d0d085ba5f968ab750b52134a16e142.png/big)
SZSE:300531 Debt to Equity History October 19th 2022
How Healthy Is Urovo Technology's Balance Sheet?
We can see from the most recent balance sheet that Urovo Technology had liabilities of CN¥574.7m falling due within a year, and liabilities of CN¥10.6m due beyond that. On the other hand, it had cash of CN¥625.4m and CN¥455.0m worth of receivables due within a year. So it actually has CN¥495.1m more liquid assets than total liabilities.
This surplus suggests that Urovo Technology has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Urovo Technology has more cash than debt is arguably a good indication that it can manage its debt safely.
But the bad news is that Urovo Technology has seen its EBIT plunge 12% in the last twelve months. If that rate of decline in earnings continues, the company could find itself in a tight spot. 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 Urovo Technology 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.
Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Urovo Technology 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. Looking at the most recent three years, Urovo Technology recorded free cash flow of 44% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Urovo Technology has net cash of CN¥328.3m, as well as more liquid assets than liabilities. So we are not troubled with Urovo Technology's debt use. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Urovo Technology's earnings per share history for free.
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.
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.
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。重要的是烏羅沃科技有限公司。(SZSE:300531)確實有債務。但股東是否應該擔心它的債務使用情況?
為什麼債務會帶來風險?
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。資本主義的一部分是“創造性破壞”的過程,破產的企業被銀行家無情地清算。然而,一種更常見(但仍令人痛苦)的情景是,它不得不以低價籌集新的股本,從而永久性地稀釋股東。話雖如此,最常見的情況是一家公司對債務管理得相當好--並對自己有利。當我們檢查債務水平時,我們首先同時考慮現金和債務水平。
查看我們對Urovo技術的最新分析
Urovo科技的債務是什麼?
下面的圖表顯示,Urovo Technology在2022年6月負債2.971億元人民幣,與前一年大致相同。你可以點擊查看更多詳細信息。但另一方面,它也擁有6.254億加元的現金,導致淨現金頭寸為3.283億加元。
![debt-equity-history-analysis](https://usnewsfile.futunn.com/pic/0-15759934-0-1d0d085ba5f968ab750b52134a16e142.png/big)
深圳證交所:300531債轉股歷史2022年10月19日
Urovo Technology的資產負債表有多健康?
從最近的資產負債表中我們可以看到,Urovo科技有5.747億元的負債在一年內到期,還有1060萬元的負債在一年內到期。另一方面,它有6.254億加元的現金和價值4.55億加元的應收賬款在一年內到期。所以它實際上有人民幣4.951億元更多流動資產超過總負債。
這一盈餘表明,Urovo Technology擁有保守的資產負債表,很可能會毫不費力地消除債務。簡而言之,Urovo Technology的現金多於債務這一事實可以説是一個很好的跡象,表明它能夠安全地管理債務。
但壞消息是,Urovo Technology的息税前利潤在過去12個月裏暴跌了12%。如果盈利下降的速度繼續下去,該公司可能會發現自己陷入了困境。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Urovo Technology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。
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Urovo Technology的資產負債表上有淨現金,但它將息税前收益(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。縱觀最近三年,Urovo Technology的自由現金流佔其息税前利潤的44%,這一數字低於我們的預期。這種疲軟的現金轉換增加了處理債務的難度。
總結
雖然我們同情那些對債務感到擔憂的投資者,但你應該記住,Urovo科技擁有3.283億元人民幣的淨現金,以及更多的流動資產而不是負債。因此,我們對Urovo Technology的債務使用並不感到困擾。在大多數其他指標中,我們認為跟蹤每股收益的增長速度(如果有的話)是很重要的。如果你也意識到了這一點,那麼你就幸運了,因為今天你可以免費查看Urovo Technology每股收益歷史的互動圖表。
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。