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These 4 Measures Indicate That American Water Works Company (NYSE:AWK) Is Using Debt Extensively

These 4 Measures Indicate That American Water Works Company (NYSE:AWK) Is Using Debt Extensively

这4项措施表明美国自来水公司(纽约证券交易所代码:AWK)正在广泛使用债务
Simply Wall St ·  05/22 07:41

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, American Water Works Company, Inc. (NYSE:AWK) does carry debt. But the real question is whether this debt is making the company risky.

传奇基金经理李露(由查理·芒格支持)曾经说过:“最大的投资风险不是价格的波动,而是你是否会遭受永久的资本损失。”当我们考虑一家公司的风险时,我们总是喜欢考虑其债务的用途,因为债务过载可能导致破产。重要的是,美国自来水公司(纽约证券交易所代码:AWK)确实有债务。但真正的问题是这笔债务是否使公司面临风险。

What Risk Does Debt Bring?

债务会带来什么风险?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

债务可以帮助企业,直到企业难以偿还债务,无论是新资本还是自由现金流。如果情况变得非常糟糕,贷款人可以控制业务。尽管这种情况并不常见,但我们经常会看到负债公司永久稀释股东,因为贷款人迫使他们以不良价格筹集资金。当然,债务可以成为企业的重要工具,尤其是资本密集型企业。在考虑企业使用多少债务时,要做的第一件事是同时考虑其现金和债务。

How Much Debt Does American Water Works Company Carry?

美国自来水公司背负了多少债务?

You can click the graphic below for the historical numbers, but it shows that as of March 2024 American Water Works Company had US$13.1b of debt, an increase on US$11.2b, over one year. However, it also had US$656.0m in cash, and so its net debt is US$12.5b.

你可以点击下图查看历史数字,但它显示,截至2024年3月,美国自来水公司在一年内有131亿美元的债务,比112亿美元有所增加。但是,它也有6.56亿美元的现金,因此其净负债为125亿美元。

debt-equity-history-analysis
NYSE:AWK Debt to Equity History May 22nd 2024
纽约证券交易所:AWK 债务与股本比率历史记录 2024 年 5 月 22 日

How Strong Is American Water Works Company's Balance Sheet?

美国自来水公司的资产负债表有多强?

The latest balance sheet data shows that American Water Works Company had liabilities of US$1.86b due within a year, and liabilities of US$19.2b falling due after that. Offsetting this, it had US$656.0m in cash and US$665.5m in receivables that were due within 12 months. So its liabilities total US$19.8b more than the combination of its cash and short-term receivables.

最新的资产负债表数据显示,美国自来水公司的负债为18.6亿美元,此后到期的负债为192亿美元。与此相抵消的是,它有6.56亿美元的现金和6.65亿美元的应收账款将在12个月内到期。因此,其负债总额比其现金和短期应收账款的总和高出198亿美元。

This deficit is considerable relative to its very significant market capitalization of US$26.0b, so it does suggest shareholders should keep an eye on American Water Works Company's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry.

与其260亿美元的巨大市值相比,这一赤字相当可观,因此这确实表明股东应密切关注美国自来水公司的债务使用情况。这表明,如果公司需要迅速支撑资产负债表,股东将被严重稀释。

In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).

为了扩大公司相对于收益的负债规模,我们计算其净负债除以利息、税项、折旧和摊销前的收益(EBITDA),将其利息和税前收益(EBIT)除以利息支出(利息保障)。这种方法的优势在于,我们既考虑了债务的绝对数量(包括净负债与息税折旧摊销前利润),也考虑了与该债务相关的实际利息支出(及其利息覆盖率)。

American Water Works Company has a rather high debt to EBITDA ratio of 5.5 which suggests a meaningful debt load. But the good news is that it boasts fairly comforting interest cover of 4.1 times, suggesting it can responsibly service its obligations. On a slightly more positive note, American Water Works Company grew its EBIT at 13% over the last year, further increasing its ability to manage debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine American Water Works Company'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.

美国自来水公司的债务与息税折旧摊销前利润的比率相当高,为5.5,这表明债务负担相当可观。但好消息是,它拥有相当令人欣慰的4.1倍的利息保障,这表明它可以负责任地履行其义务。稍微乐观的一面是,美国自来水公司的息税前利润比去年增长了13%,进一步提高了其管理债务的能力。在分析债务水平时,资产负债表是显而易见的起点。但是,未来收益将决定美国自来水公司未来维持健康资产负债表的能力。因此,如果您专注于未来,可以查看这份显示分析师利润预测的免费报告。

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So it's worth checking how much of that EBIT is backed by free cash flow. During the last three years, American Water Works Company 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.

最后,企业需要自由现金流来偿还债务;会计利润根本无法减少债务。因此,值得检查一下息税前利润中有多少是由自由现金流支持的。在过去的三年中,美国自来水公司消耗了大量现金。尽管投资者无疑预计这种情况将在适当的时候逆转,但这显然意味着其使用债务的风险更大。

Our View

我们的观点

To be frank both American Water Works Company's net debt to EBITDA and its track record of converting EBIT to free cash flow make us rather uncomfortable with its debt levels. But on the bright side, its EBIT growth rate is a good sign, and makes us more optimistic. We should also note that Water Utilities industry companies like American Water Works Company commonly do use debt without problems. Overall, we think it's fair to say that American Water Works Company has enough debt that there are some real risks around the balance sheet. If all goes well, that should boost returns, but on the flip side, the risk of permanent capital loss is elevated by the debt. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 2 warning signs we've spotted with American Water Works Company (including 1 which is a bit unpleasant) .

坦率地说,美国自来水公司的净负债与息税折旧摊销前利润的比率及其将息税前利润转换为自由现金流的往绩都使我们对其债务水平感到相当不舒服。但好的一面是,其息税前利润增长率是一个好兆头,也使我们更加乐观。我们还应该注意,像美国自来水公司这样的水务行业公司通常会毫无问题地使用债务。总体而言,我们认为可以公平地说,美国自来水公司的债务足以使资产负债表存在一些实际风险。如果一切顺利,这应该会提高回报,但另一方面,债务会增加永久资本损失的风险。资产负债表显然是分析债务时需要关注的领域。但是,并非所有的投资风险都存在于资产负债表中,远非如此。为此,你应该了解我们在美国自来水公司发现的两个警告标志(包括一个有点不愉快的警告)。

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.

如果你有兴趣投资能够在没有债务负担的情况下增加利润的企业,请查看这份资产负债表上有净现金的成长型企业的免费清单。

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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.

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