Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Getein Biotech, Inc (SHSE:603387) does use debt in its business. But the real question is whether this debt is making the company risky.
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. 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.
Check out our latest analysis for Getein Biotech
What Is Getein Biotech's Debt?
The image below, which you can click on for greater detail, shows that at September 2022 Getein Biotech had debt of CN¥659.5m, up from CN¥378.5m in one year. But it also has CN¥1.73b in cash to offset that, meaning it has CN¥1.07b net cash.
SHSE:603387 Debt to Equity History December 13th 2022
A Look At Getein Biotech's Liabilities
The latest balance sheet data shows that Getein Biotech had liabilities of CN¥954.0m due within a year, and liabilities of CN¥58.8m falling due after that. On the other hand, it had cash of CN¥1.73b and CN¥529.8m worth of receivables due within a year. So it can boast CN¥1.25b more liquid assets than total liabilities.
It's good to see that Getein Biotech has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Due to its strong net asset position, it is not likely to face issues with its lenders. Simply put, the fact that Getein Biotech has more cash than debt is arguably a good indication that it can manage its debt safely.
In addition to that, we're happy to report that Getein Biotech has boosted its EBIT by 84%, thus reducing the spectre of future debt repayments. There's no doubt that we learn most about debt from the balance sheet. But it is Getein Biotech'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.
Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Getein Biotech 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. In the last three years, Getein Biotech's free cash flow amounted to 41% of its EBIT, less 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 Getein Biotech has net cash of CN¥1.07b, as well as more liquid assets than liabilities. And we liked the look of last year's 84% year-on-year EBIT growth. So is Getein Biotech's debt a risk? It doesn't seem so to us. 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. To that end, you should be aware of the 1 warning sign we've spotted with Getein Biotech .
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.
马克斯说得很好，他不是担心股价波动，而是我担心的是永久亏损的可能性……我认识的每个实际投资者都担心。因此，当你考虑到任何一只股票的风险有多大时，你需要考虑债务可能是显而易见的，因为太多的债务可能会让一家公司倒闭。我们可以看到Getein Biotech公司(上海证券交易所：603387)确实在其业务中使用债务。但真正的问题是，这笔债务是否让该公司面临风险。
债务在什么时候是危险的？
债务帮助企业，直到企业难以偿还债务，无论是用新资本还是用自由现金流。在最糟糕的情况下，如果一家公司无法偿还债权人的债务，它可能会破产。然而，一种更常见(但仍然昂贵)的情况是，一家公司必须以低廉的股价稀释股东的股份，才能控制债务。话虽如此，最常见的情况是一家公司对债务管理得相当好--并对自己有利。在考虑一家公司的债务水平时，第一步是同时考虑其现金和债务。
查看我们对Getein Biotech的最新分析
Getein Biotech的债务是什么？
下图显示，截至2022年9月，Getein Biotech的债务为6.595亿加元，高于一年内的3.785亿加元。你可以点击查看更多细节。但它也有人民币17.3亿元的现金来抵消，这意味着它有人民币10.7亿元的净现金。
上证综指：603387债转股历史2022年12月13日
看Getein Biotech的负债
最新的资产负债表数据显示，Getein Biotech有9.54亿元的负债在一年内到期，5880万元的负债在一年内到期。另一方面，它有17.3亿加元的现金和5.298亿加元的应收账款在一年内到期。因此，它可以号称拥有比总计负债。
很高兴看到Getein Biotech的资产负债表上有充足的流动性，这表明它对负债的管理是保守的。由于其强大的净资产状况，它不太可能面临与贷款人的问题。简而言之，Getein Biotech拥有比债务更多的现金，这可以说是一个很好的迹象，表明它能够安全地管理债务。
除此之外，我们很高兴地报告，Getein Biotech已将其息税前利润提高了84%，从而降低了未来偿还债务的幽灵。毫无疑问，我们从资产负债表中了解到的债务最多。但Getein Biotech的收益将影响未来资产负债表的表现。因此，如果你热衷于了解更多关于它的收益，可能值得查看一下它的长期收益趋势图。
最后，一家公司只能用冷硬现金偿还债务，而不是会计利润。虽然Getein Biotech的资产负债表上有净现金，但它将息税前收益(EBIT)转换为自由现金流的能力仍然值得一看，以帮助我们了解它建立(或侵蚀)现金余额的速度有多快。在过去的三年里，Getein Biotech的自由现金流占其息税前利润的41%，低于我们的预期。这种疲软的现金转换增加了处理债务的难度。
总结
虽然我们同情那些对债务感到担忧的投资者，但你应该记住，Getein Biotech拥有10.7亿元人民币的净现金，以及更多的流动资产而不是负债。我们喜欢去年息税前利润同比增长84%的表现。那么，Getein Biotech的债务是一种风险吗？但在我们看来并非如此。在分析债务水平时，资产负债表显然是一个起点。但归根结底，每家公司都可能包含存在于资产负债表之外的风险。为此，您应该意识到1个警告标志我们发现了Getein Biotech。
当然，如果你是那种喜欢在没有债务负担的情况下购买股票的投资者，那么不要犹豫，今天就来看看我们的净现金成长型股票独家名单。
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本文由Simply Wall St.撰写，具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论，我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议，也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意，我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。
