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.
由伯克希爾哈撒韋的Li·芒格支持的外部基金經理Lu直言不諱地說，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。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。我們可以看到中信商城集團有限公司(HKG：1815)確實在其業務中使用債務。但這筆債務對股東來說是一個擔憂嗎？
債務會帶來什麼風險？
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。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，一種更常見(但仍然昂貴)的情況是，一家公司必須以低廉的股價稀釋股東的股份，才能控制債務。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。在考慮一家公司的債務水準時，第一步是同時考慮其現金和債務。
查看我們對CSMall集團的最新分析
CSMall集團背負著多少債務？
下圖顯示，截至2022年6月，CSMall集團的債務為1.007億加元，高於一年內的1290萬加元。你可以點擊查看更多細節。然而，它確實有3.794億加元的現金抵消了這一點，導致淨現金為2.787億加元。
聯交所：1815債轉股歷史2022年12月9日
CSMall集團的資產負債表有多強勁？
根據最近一次報告的資產負債表，CSMall集團有2.30億加元的負債在12個月內到期，346萬加元的負債在12個月後到期。作為抵消，它有3.794億加元的現金和1.002億加元的應收賬款在12個月內到期。所以它實際上有2.462億元人民幣更多流動資產超過總負債。
這種過剩的流動性表明，CSMall Group的資產負債表可能會受到打擊，就像霍默·辛普森(Hmer Simpson)的頭可能受到打擊一樣。考慮到這一事實，我們認為它的資產負債表像牛一樣堅固。簡而言之，CSMall Group的現金多於債務這一事實可以說是一個很好的跡象，表明它能夠安全地管理債務。毫無疑問，我們從資產負債表中瞭解到的債務最多。但CSMall集團的盈利將影響未來資產負債表的表現。因此，如果你熱衷於瞭解更多關於它的收益，可能值得查看一下它的長期收益趨勢圖。
去年，CSMall Group沒有實現息稅前利潤，但其收入增長了184%，達到人民幣9.87億元。因此，很明顯，它的股東們希望有更多的增長！
那麼，CSMall集團的風險有多大？
雖然CSMall集團在息稅前收益(EBIT)水準上虧損，但它實際上產生了正的自由現金流人民幣2.68億元。因此，儘管它在虧損，但考慮到淨現金，它似乎沒有太大的近期資產負債表風險。我們認為其收入增長184%是一個好兆頭。我們會認為進一步強勁的增長是一個樂觀的跡象。在分析債務水準時，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。我們已經確定了兩個警告信號與CSMall Group合作(至少1個不可忽視)，瞭解他們應該是你投資過程的一部分。
如果你有興趣投資於可以在沒有債務負擔的情況下增長利潤的企業，那麼看看這個免費資產負債表上有淨現金的成長型企業名單。
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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。
