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.' 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, Lifecome Biochemistry Co.,Ltd. (SZSE:002868) does carry debt. But the real question is whether this debt is making the company risky.
When Is Debt A Problem?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
View our latest analysis for Lifecome BiochemistryLtd
How Much Debt Does Lifecome BiochemistryLtd Carry?
As you can see below, at the end of September 2022, Lifecome BiochemistryLtd had CN¥285.2m of debt, up from CN¥271.5m a year ago. Click the image for more detail. However, because it has a cash reserve of CN¥34.7m, its net debt is less, at about CN¥250.5m.
SZSE:002868 Debt to Equity History December 10th 2022
How Healthy Is Lifecome BiochemistryLtd's Balance Sheet?
We can see from the most recent balance sheet that Lifecome BiochemistryLtd had liabilities of CN¥449.5m falling due within a year, and liabilities of CN¥163.6m due beyond that. Offsetting these obligations, it had cash of CN¥34.7m as well as receivables valued at CN¥63.9m due within 12 months. So it has liabilities totalling CN¥514.5m more than its cash and near-term receivables, combined.
Of course, Lifecome BiochemistryLtd has a market capitalization of CN¥8.40b, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. 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 Lifecome BiochemistryLtd will need earnings to service that debt. 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.
Over 12 months, Lifecome BiochemistryLtd reported revenue of CN¥345m, which is a gain of 8.1%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.
Caveat Emptor
Over the last twelve months Lifecome BiochemistryLtd produced an earnings before interest and tax (EBIT) loss. To be specific the EBIT loss came in at CN¥75m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through CN¥215m of cash over the last year. So suffice it to say we do consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example - Lifecome BiochemistryLtd has 2 warning signs we think you should be aware of.
When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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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。當我們考慮一家公司的風險有多大時,我們總是喜歡看它對債務的使用,因為債務過重可能導致破產。重要的是生命美生物化學有限公司。(SZSE:002868)確實有債務。但真正的問題是,這筆債務是否讓該公司面臨風險。
什麼時候債務是個問題?
當一家企業無法輕鬆履行這些義務時,債務和其他債務就會變得有風險,無論是通過自由現金流還是通過以有吸引力的價格籌集資本。如果情況真的變得很糟糕,貸款人可以控制業務。儘管這並不常見,但我們確實經常看到負債累累的公司永久性地稀釋股東的權益,因為貸款人迫使他們以令人沮喪的價格籌集資金。然而,通過取代稀釋,對於需要資本投資於高回報率增長的企業來説,債務可以成為一個非常好的工具。當考慮一家企業使用了多少債務時,首先要做的是把現金和債務放在一起看。
查看我們對Lifecome生物化學有限公司的最新分析
Lifecome BioChemical Ltd揹負着多少債務?
如下所示,截至2022年9月底,Lifecome生化有限公司的債務為2.852億加元,高於一年前的2.715億加元。單擊圖像瞭解更多詳細信息。然而,由於它擁有3470萬加元的現金儲備,其淨債務較少,約為2.505億加元。
深交所:002868債轉股歷史2022年12月10日
Lifecome生物化學有限公司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,生命生化有限公司有4.495億元的負債在一年內到期,還有1.636億元的負債在一年內到期。作為這些債務的抵消,該公司有3470萬加元的現金以及價值6390萬加元的應收賬款在12個月內到期。因此,它的負債總計5.145億加元,比現金和近期應收賬款加起來還要多。
當然,生命生物化學有限公司的市值為84億元人民幣,因此這些負債可能是可控的。但有足夠的負債,我們肯定會建議股東繼續監控未來的資產負債表。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Lifecome BioChemical Ltd.需要盈利來償還債務。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。
在過去的12個月裏,Lifecome BioChemical Ltd報告了3.45億加元的收入,增長了8.1%,儘管它沒有公佈任何息税前收益。這種增長速度對我們的品味來説有點慢,但它需要所有類型的人來創造一個世界。
告誡買入者
在過去的12個月裏,Lifecome生化有限公司產生了息税前收益(EBIT)虧損。具體地説,息税前虧損為7500萬加元。當我們看到這一點,並回憶起資產負債表上相對於現金的負債時,在我們看來,該公司有任何債務似乎是不明智的。因此,我們認為它的資產負債表有點緊張,但並不是無法修復。然而,它在過去一年裏燒掉了2.15億元人民幣的現金,這也於事無補。因此,可以説,我們確實認為這隻股票是有風險的。毫無疑問,我們從資產負債表中瞭解到的債務最多。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。例如-Lifecome BioChemical Ltd2個警告標誌我們認為你應該意識到。
總而言之,有時候專注於甚至不需要債務的公司會更容易。讀者可以訪問淨債務為零的成長型股票列表100%免費,現在。
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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。