Company debt – Sharewared http://sharewared.com/ Wed, 21 Sep 2022 16:37:27 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://sharewared.com/wp-content/uploads/2021/06/icon-2021-06-29T134115.656-138x136.png Company debt – Sharewared http://sharewared.com/ 32 32 Buhari pleads with world leaders to cancel their debt https://sharewared.com/buhari-pleads-with-world-leaders-to-cancel-their-debt/ Wed, 21 Sep 2022 16:07:06 +0000 https://sharewared.com/buhari-pleads-with-world-leaders-to-cancel-their-debt/ By Adedapo Adesanya Key energy sector stakeholders pledged to foster the growth of the Nigerian power sector at the Nigeria Energy Expo and Conference, with a focus on effective collaboration. Those who matter in the industry are present at the event, which started on September 20 at the Landmark Center and will end on September […]]]>

By Adedapo Adesanya

Key energy sector stakeholders pledged to foster the growth of the Nigerian power sector at the Nigeria Energy Expo and Conference, with a focus on effective collaboration.

Those who matter in the industry are present at the event, which started on September 20 at the Landmark Center and will end on September 22, 2022, committing to collaborate effectively across the value chain to meet energy needs. croissants from Nigeria.

Speaking at the conference, Mr. Abubakar D. Aliyu, Minister of Energy of Nigeria, represented by Mr. Temitope Fashedemi, Permanent Secretary, said: “We understand that Nigeria’s aspiration for economic development requires more energy than we currently have.

“Our current unmet energy needs are huge, and they are sure to increase due to urbanization and population expansion. This clearly shows that access to energy is essential to advancing our country’s development agenda. Therefore, enabling policy and investments in modern energy technologies are needed.

“I believe that collaboration is key to achieving our energy goals. The essential financing to ensure access to energy belongs to the private sector. And the task of unleashing finance through policies, incentives and creating an enabling environment for investment is what the government is committed to achieving. As such, collaborations with the private sector and our development partners are key to accelerating our efforts towards a sustainable energy supply,” he said.

Commenting on the event, the Minister said, “Energy is conceptually one of the most important infrastructure requirements for human existence as it is one of the most important components of economic development. This unique event not only gives us the opportunity to engage with public and private sector actors, but also allows us to share our knowledge with international energy experts and investors to develop new solutions.

Mr. Ade Yesufu, Exhibition Manager, Nigeria Energy, said, “Over the next three days, we will have the opportunity to network with leading suppliers and key industry players to discuss reliable power solutions that can be implemented to meet Nigeria’s growing demand. and how we can work together to pave the way for decentralization of the electricity sector.

“Alongside the exhibition, we have a three-day high-level knowledge-rich conference that will feature the most powerful panel discussions on building energy capacity, financing energy projects, increasing efficiency through to new technologies and the exploration of the renewable energy mix with a particular focus on green hydrogen. .”

The Nigeria Energy Exhibition and Conference is supported by the world’s leading energy and infrastructure players including SkipperSeil Limited, Abuja Electricity Distribution Company, Ikeja Electric, Simba Industries, Tetracore Group, Mojec International, Tranos, Powerpro, Himel and Mikano International, Eaton, Lucy Electric, Greenville LNG and Jubaili Bros.

These key industry players will showcase the latest and commercially sustainable energy solutions at Nigeria Energy, alongside an in-depth look at finding practical solutions to Nigeria’s power sector challenges at the conference.

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Camtek (NASDAQ:CAMT) could easily take on more debt https://sharewared.com/camtek-nasdaqcamt-could-easily-take-on-more-debt/ Sat, 17 Sep 2022 15:11:55 +0000 https://sharewared.com/camtek-nasdaqcamt-could-easily-take-on-more-debt/ Warren Buffett said: “Volatility is far from synonymous with risk. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Above all, Camtek Ltd. (NASDAQ:CAMT) is in debt. But the real question is whether this […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Above all, Camtek Ltd. (NASDAQ:CAMT) is in debt. But the real question is whether this debt makes the business risky.

What risk does debt carry?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, it exists at their mercy. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first step when considering a company’s debt levels is to consider its cash and debt together.

Check out our latest analysis for Camtek

What is Camtek’s debt?

As you can see below, at the end of June 2022, Camtek had $195.2 million in debt, up from none a year ago. Click on the image for more details. However, he has $391.0 million in cash to offset this, which translates to net cash of $195.9 million.

NasdaqGM: CAMT Debt to Equity History September 17, 2022

How strong is Camtek’s balance sheet?

The latest balance sheet data shows that Camtek had liabilities of $86.3 million due within the year, and liabilities of $202.1 million due thereafter. In return, it had $391.0 million in cash and $77.4 million in receivables due within 12 months. He can therefore boast of having $180.1 million in cash more than total Passives.

This excess liquidity suggests that Camtek is taking a cautious approach to debt. Due to her strong net asset position, she is unlikely to run into problems with her lenders. Simply put, the fact that Camtek has more cash than debt is arguably a good indication that it can safely manage its debt.

On top of that, we are pleased to report that Camtek increased its EBIT by 74%, reducing the specter of future debt repayments. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Camtek can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, while the taxman may love accounting profits, lenders only accept cash. Camtek may have net cash on the balance sheet, but it’s always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need and its ability to manage debt. Over the past three years, Camtek has produced strong free cash flow equivalent to 70% of its EBIT, which is what we expected. This free cash flow puts the company in a good position to repay its debt, should it arise.

Summary

While it’s always a good idea to investigate a company’s debt, in this case Camtek has $195.9 million in net cash and a decent balance sheet. And it has impressed us with its 74% EBIT growth over the past year. We therefore do not believe that Camtek’s use of debt is risky. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks reside on the balance sheet, far from it. Example: we have identified 1 warning sign for Camtek you should be aware.

If you are interested in investing in companies that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Valuation is complex, but we help make it simple.

Find out if Camtek is potentially overvalued or undervalued by viewing our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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Is CEAT (NSE: CEATLTD) using too much debt? https://sharewared.com/is-ceat-nse-ceatltd-using-too-much-debt/ Fri, 16 Sep 2022 00:23:40 +0000 https://sharewared.com/is-ceat-nse-ceatltd-using-too-much-debt/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing a company’s risk. We note that CEAT Limited (NSE: CEATLTD) has debt on its balance sheet. But the real question is whether this debt makes the business risky.

When is debt a problem?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. If things go really bad, lenders can take over the business. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, permanently diluting shareholders, just to shore up its balance sheet. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. The first step when considering a company’s debt levels is to consider its cash and debt together.

Discover our latest analysis for CEAT

How much debt does CEAT bear?

As you can see below, at the end of March 2022, CEAT had ₹22.3 billion in debt, up from ₹15.3 billion a year ago. Click on the image for more details. And he doesn’t have a lot of cash, so his net debt is about the same.

NSEI: CEATLTD Historical Debt to Equity September 16, 2022

How healthy is CEAT’s balance sheet?

We can see from the most recent balance sheet that CEAT had liabilities of ₹36.6 billion falling due within a year, and liabilities of ₹22.0 billion due beyond. As compensation for these obligations, it had cash of ₹326.4 million as well as receivables valued at ₹12.1 billion due within 12 months. Thus, its liabilities total ₹46.2 billion more than the combination of its cash and short-term receivables.

This deficit is sizable compared to its market capitalization of ₹67.2 billion, so it suggests shareholders should monitor CEAT’s use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet quickly.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

While CEAT’s debt to EBITDA ratio (3.6) suggests it is using some debt, its interest coverage is very low at 1.4, suggesting high leverage. It looks like the company is incurring significant amortization and amortization costs, so perhaps its leverage is heavier than it first appears, since EBITDA is arguably a generous metric. benefits. Shareholders should therefore probably be aware that interest charges seem to have had a real impact on the company lately. Worse still, CEAT’s EBIT was down 61% from last year. If profits continue like this in the long term, there is an unimaginable chance of repaying this debt. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether CEAT can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. We must therefore clearly examine whether this EBIT generates a corresponding free cash flow. Over the past three years, CEAT has created free cash flow of 8.3% of its EBIT, a performance without interest. For us, such a low cash conversion creates a bit of paranoia about the ability to extinguish the debt.

Our point of view

To be frank, CEAT’s interest coverage and history of (not) growing EBIT makes us rather uncomfortable with its level of leverage. And even its net debt to EBITDA doesn’t inspire much confidence. Overall, it seems to us that CEAT’s balance sheet is really a risk for the company. For this reason, we are quite cautious about the stock and believe shareholders should keep a close eye on its liquidity. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks reside on the balance sheet, far from it. For example, we have identified 3 warning signs for CEAT (1 is a bit obnoxious) you should be aware.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Valuation is complex, but we help make it simple.

Find out if CEAT is potentially overvalued or undervalued by viewing our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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is bioMérieux (EPA:BIM) taking on too much debt? https://sharewared.com/is-biomerieux-epabim-taking-on-too-much-debt/ Wed, 14 Sep 2022 06:47:41 +0000 https://sharewared.com/is-biomerieux-epabim-taking-on-too-much-debt/ Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We can see that bioMérieux SA (EPA:BIM) uses debt in its business. But should shareholders worry about its use of debt? What […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We can see that bioMérieux SA (EPA:BIM) uses debt in its business. But should shareholders worry about its use of debt?

What risk does debt carry?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Discover our latest analyzes for bioMérieux

What is bioMérieux’s debt?

The image below, which you can click on for more details, shows that in June 2022, bioMérieux had a debt of €472.6m, compared to €395.4m in one year. But he also has €524.2m in cash to offset that, meaning he has €51.6m in net cash.

ENXTPA: BIM Debt to Equity History September 14, 2022

A look at bioMérieux’s liabilities

We can see on the most recent balance sheet that bioMérieux had liabilities of 1.02 billion euros within one year and liabilities of 506.6 million euros beyond. On the other hand, it has cash of €524.2 million and €825.7 million in receivables at less than one year. Thus, its liabilities outweigh the sum of its cash and (short-term) receivables by €177.4 million.

This indicates that bioMérieux’s balance sheet looks quite strong, with total liabilities roughly equal to its cash. It is therefore very unlikely that the 10.6 billion euro company will run out of cash, but it is still worth keeping an eye on the balance sheet. Despite significant liabilities, bioMérieux has a net cash position, so it is fair to say that it is not heavily indebted!

If bioMérieux does not seem to have gained much on the EBIT line, at least earnings remain stable for now. There is no doubt that we learn the most about debt from the balance sheet. But it is above all future results that will determine bioMérieux’s ability to maintain a healthy balance sheet in the future. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. bioMérieux may have net cash on the balance sheet, but it is always interesting to look at the extent to which the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need and its ability to manage debt. Over the past three years, bioMérieux has recorded free cash flow of 47% of its EBIT, which is lower than expected. This low cash conversion makes debt management more difficult.

Summary

While it is always wise to look at a company’s total liabilities, it is very reassuring that bioMérieux has €51.6 million in net cash. We therefore have no problem with the use of debt by bioMérieux. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example, we found 1 warning sign for bioMérieux which you should be aware of before investing here.

In the end, sometimes it’s easier to focus on companies that don’t even need to take on debt. Readers can access a list of growth stocks with no net debt 100% freeat present.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Valuation is complex, but we help make it simple.

Find out if bioMérieux is potentially overvalued or undervalued by consulting our complete analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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Rising costs fuel concerns over US airlines’ heavy debt load https://sharewared.com/rising-costs-fuel-concerns-over-us-airlines-heavy-debt-load/ Sat, 10 Sep 2022 22:51:02 +0000 https://sharewared.com/rising-costs-fuel-concerns-over-us-airlines-heavy-debt-load/ CHICAGO: A scramble by U.S. carriers to fill empty cockpits is fueling cost pressures just as growing economic worries have cast a shadow over travel demand, raising concerns about the ability of indebted airlines to repair their balance sheets. Although ticket sales remain strong, investors worry about consumer spending if the economy slides into recession. […]]]>

CHICAGO: A scramble by U.S. carriers to fill empty cockpits is fueling cost pressures just as growing economic worries have cast a shadow over travel demand, raising concerns about the ability of indebted airlines to repair their balance sheets.

Although ticket sales remain strong, investors worry about consumer spending if the economy slides into recession. They worry that carriers will be forced to borrow even more money to finance their operations and further delay the repayment of cash through stock buybacks or dividends.

Some have stayed away from investing in the industry despite a rebound from the pandemic-induced crisis, saying carriers don’t have enough tools to offset cost pressures.

“Airline investors would be better off if the Wright Brothers plane crashed and burned,” said Act Two Investors chairman Jeffrey Scharf, who follows the sector but does not currently own shares in it. .

“I can’t think of a worse company with high fixed costs, a deteriorating commodity, service, alienated customers who are fed up with being nickel and dime for every convenience.” For the traveling public, that could mean fewer planes and crowded planes as airlines boost revenue through higher ticket prices.

Debt reduction is a priority for an industry that has been on a borrowing spree to survive the pandemic. The big three flag carriers – American, United and Delta Airlines had $85 billion in long-term net debt at the end of the second quarter.

Airlines need strong, sustained profits to reduce debt, but rising fuel and labor costs are making that difficult, analysts say.

United Airlines’ salary and fuel spend as a percentage of revenue increased 10 points this year compared to 2019. In the first six months of 2022, the company spent 59% of its revenue on salary and fuel bills . American Airlines saw similar increases.

“These carriers have multi-year balance sheet repairs ahead of them,” said aviation analyst Robert Mann. “Job #1 is going to use free cash flow to pay off those increased debt levels.” Cost pressures are expected to worsen as a shortage of pilots at smaller regional carriers means dramatic salary increases.

Mesa Air Group, which operates flights for American and United, last month raised pilot salaries by as much as 172%.

It came days after CommutAir, a regional carrier partly owned by United, raised pilot salaries by up to 40%. The increases were in response to American’s decision in June to raise pilot salaries at regional affiliates by up to 87%.

Wage increases have cost implications for the entire industry, as they push rivals to offer similar increases.

National carriers are also expected to feel the pinch as regional partners seek to pass on increased costs. Raymond James analysts estimate that wage increases at regional airlines could increase non-fuel operating costs at national carriers by up to 3.3 percentage points.

Flag carrier pilots are also pushing for big pay rises.

United are renegotiating with their drivers’ union after some drivers expressed reservations about the latest deal which included a double-digit pay rise.

American’s bid for pay raises of about 17% plus higher per diems and training through 2024 — which would cost the company more than $2 billion — hasn’t found favor. favor of the pilots.

Labor costs were the industry’s largest operating expense last year at around 35%. That figure is only down this year due to higher fuel costs, but the surge in hiring is expected to swell payrolls.

In the meantime, costs are expected to remain high. United has projected a 2022 fuel bill $9 billion higher than 2019.

Pricing power

Airlines are counting on strong consumer demand and higher fares to ease inflationary pressures.

Investors are uncertain whether carriers will have the same pricing power if consumer demand slows. And business travel – the industry’s cash cow – has yet to recover to pre-pandemic levels.

“There’s a big question about who’s going to fly, how often they’re going to fly and how much they’re going to be willing to pay,” said Tim Ghriskey, senior portfolio strategist at the investment advisory firm Ingalls & Snyder. .

On Wednesday, American and United played down demand concerns, saying there had been no slowdown in travel bookings after the summer.

American said it has excess cash that it plans to use to pay down debt. However, he is holding this money due to economic uncertainty.

Investors also want the return of share buybacks and dividends. Under the federal Covid-19 relief plan, airlines have been banned from buying back their shares. This ban is due to expire this month.

Non-fuel cost pressures should ease once carriers start operating as many flights as before the pandemic.

Most airlines plan to increase their capacity next year. But Michael Wall, portfolio manager at investment management firm Westwood Group, warned that this could backfire in the event of a recession.

“Once the demand disappears, their pricing power disappears,” he said.

Posted in Dawn, September 11, 2022

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Is Stanmore Resources (ASX:SMR) using too much debt? https://sharewared.com/is-stanmore-resources-asxsmr-using-too-much-debt/ Sun, 04 Sep 2022 22:43:38 +0000 https://sharewared.com/is-stanmore-resources-asxsmr-using-too-much-debt/ Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. So it may be obvious that you need to take debt into account when thinking about the risk of […]]]>

Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Like many other companies Stanmore Resources Limited (ASX:SMR) uses debt. But the more important question is: what risk does this debt create?

What risk does debt carry?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. If things go really bad, lenders can take over the business. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

See our latest analysis for Stanmore Resources

What is Stanmore Resources net debt?

As you can see below, at the end of June 2022, Stanmore Resources had $776.6 million in debt, up from $43.6 million a year ago. Click on the image for more details. However, he has $546.1 million in cash to offset this, resulting in a net debt of approximately $230.5 million.

ASX: SMR Debt to Equity History September 4, 2022

How strong is Stanmore Resources’ balance sheet?

The latest balance sheet data shows that Stanmore Resources had liabilities of $729.5 million due within the year, and liabilities of $1.63 billion due thereafter. On the other hand, it had a cash position of 546.1 million dollars and 378.7 million dollars of receivables at less than one year. Thus, its liabilities total $1.44 billion more than the combination of its cash and short-term receivables.

When you consider that this shortfall exceeds the company’s market capitalization of US$1.41 billion, you might well be inclined to take a close look at the balance sheet. In theory, extremely large dilution would be required if the company were forced to repay its debts by raising capital at the current share price.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

Stanmore Resources has a low net debt to EBITDA ratio of just 0.48. And its EBIT covers its interest charges 22.2 times. So we’re pretty relaxed about his super-conservative use of debt. Although Stanmore Resources posted an EBIT loss last year, it was also good to see that it generated $430 million in EBIT over the last twelve months. There is no doubt that we learn the most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Stanmore Resources’ ability to maintain a healthy balance sheet in the future. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, a company can only repay its debts with cold hard cash, not with book profits. It is therefore important to check how much of its earnings before interest and taxes (EBIT) converts into actual free cash flow. Over the past year, Stanmore Resources has actually produced more free cash flow than EBIT. This kind of high cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Our point of view

Stanmore Resources’ interest coverage was a real plus in this analysis, as was its conversion of EBIT to free cash flow. On the other hand, its level of total liabilities makes us a little less comfortable about its indebtedness. When you consider all the elements mentioned above, it seems to us that Stanmore Resources manages its debt rather well. That said, the charge is heavy enough that we recommend that any shareholder keep a close eye on it. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks reside on the balance sheet, far from it. Be aware that Stanmore Resources displays 2 warning signs in our investment analysis and 1 of them should not be ignored…

If you are interested in investing in companies that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Calculation of discounted cash flows for each share

Simply Wall St performs a detailed calculation of discounted cash flow every 6 hours for every stock in the market, so if you want to find the intrinsic value of any company, just search here. It’s free.

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Research: Rating Action: Moody’s Confirms BVI Medical’s Caa1 CFR, Negative Outlook https://sharewared.com/research-rating-action-moodys-confirms-bvi-medicals-caa1-cfr-negative-outlook/ Fri, 02 Sep 2022 23:15:36 +0000 https://sharewared.com/research-rating-action-moodys-confirms-bvi-medicals-caa1-cfr-negative-outlook/ New York, September 02, 2022 — Moody’s Investors Service (“Moody’s”) has affirmed BVI Medical, Inc.’s (“BVI”) Caa1 Corporate Family Rating (CFR), Probability of Default (PDR) Caa1-PD ) and the Caa1 Rating on the company’s senior secured debt. The confirmation of the rating reflects improved liquidity as the company repaid its revolving loan with proceeds from […]]]>

New York, September 02, 2022 — Moody’s Investors Service (“Moody’s”) has affirmed BVI Medical, Inc.’s (“BVI”) Caa1 Corporate Family Rating (CFR), Probability of Default (PDR) Caa1-PD ) and the Caa1 Rating on the company’s senior secured debt.

The confirmation of the rating reflects improved liquidity as the company repaid its revolving loan with proceeds from a new €85 million junior term loan.

As a result of this action, Moody’s will remove the Corporate Family Rating (CFR) and Probability of Default Rating (PDR) from the borrowing entity (BVI Medical, Inc.). The CFR and PDR will pass to the parent guaranteeing entity (BVI Holdings Mayfair Limited). In addition, a negative outlook will be assigned to the parent guarantor entity (BVI Holdings Mayfair Limited). This change places the CFR, PDR and outlook at the entity, which represents the entire credit group, and reports as such in the audited financial statements provided by the company. The change in location of the CFR does not imply any change in the company’s credit profile or the creditworthiness of Moody’s rated debt.

The negative outlook reflects the company’s very high leverage due to the disruption caused by the coronavirus crisis, large one-time expenses and a gradual recovery in profits. While freeing up the revolver’s borrowing capacity is helpful, any deviation from current earnings recovery expectations can increase the firm’s leverage and thus limit its borrowing base to 35% of the amount. total of the revolver to avoid testing the covenants.

Statement:

..Issuer: BVI Medical, Inc.

…. Classification of the family of companies, Caa1 confirmed

…. Default scoring probability, Caa1-PD confirmed

…. Senior Secured Senior Revolving Credit Facility, Confirmed Caa1 (LGD3)

….Senior Secured 1st Privilege Term Loan, Confirmed Caa1 (LGD3)

Duties:

..Issuer: BVI Holdings Mayfair Limited

…. Classification of the family of companies, awarded Caa1

…. Default scoring probability, assigned Caa1-PD

Outlook Actions:

..Issuer: BVI Medical, Inc.

….Outlook, changed to no Outlook from Stable

Outlook Actions:

..Issuer: BVI Holdings Mayfair Limited

….Perspectives, Attributed Negative

RATINGS RATIONALE

BVI’s Caa1 CFR reflects the company’s moderate scale based on sales and narrow focus within its chosen ophthalmology markets. The rating also reflects Moody’s expectation that debt/EBITDA will remain above 8x over the next 12-18 months. The company faces headwinds from one-time costs and upfront expenses for new product launches, at least in the next two quarters, making the company’s earnings recovery uncertain. However, over the longer term, Moody’s expects improved case volumes and lower costs to help the company’s operating performance. The company also competes with many larger competitors who have much larger financial resources. This rating is underpinned by BVI’s long-standing presence in the materials, equipment and intraocular lens (IOL) market for cataract surgery, strong operating margins and a diverse global customer base.

The company’s liquidity is low – with $34 million in cash at the end of 06/30/2022, a substantial portion of which may be needed to cover potential cash burn over the next 6-12 months. Moody’s notes that the company has struggled to generate positive free cash flow over the past 3 years. At present, the company has access to almost all of the 65 million revolver. However, if profits remain low and the first lien net leverage ratio exceeds the level of the commitment (8.6 times – credit agreement calculation). the company’s revolver loan base could be limited to 35% of total renewable capacity.

ESG considerations have a very strong negative impact (CIS-5) on BVI’s rating. BVI’s credit exposure to environmental risk considerations is neutral to low (E-2) consistent with the overall exposure of the medical products and devices industry. BVI has a very negative credit exposure (S-4) to social risk considerations arising from responsible production, including meeting regulatory requirements for the safety of its products as well as adverse reputational risks arising from recalls associated with manufacturing defects. Many of the company’s products are implanted inside the human eye and are subject to harsh regulatory actions and product liability litigation. BVI’s credit exposure to governance risk considerations is very strongly negative (G-5). The Company’s governance risks reflect its very aggressive financial strategy and risk management, as the Company maintains very high leverage. Additionally, the company has a board structure, which is dominated by members representing the company’s private equity sponsor – TPG Capital.

FACTORS THAT MAY LEAD TO IMPROVEMENT OR DEGRADATION OF RATINGS

The ratings could be upgraded if the company’s operating performance recovers, resulting in EBITDA comparable to pre-pandemic levels and positive free cash flow. Quantitatively, the ratings could be improved if BVI maintains its debt/EBITDA below 8.0 times while maintaining a good liquidity profile.

Ratings could be downgraded if elective vision procedures remain postponed beyond our current expectations, if free cash flow remains negative for an extended period or if liquidity erodes further.

Based in Waltham, Massachusetts, BVI Medical, Inc. (BVI) is a global manufacturer of products used in eye surgeries (primarily cataract procedures). BVI was acquired by private equity firm TPG Capital in August 2016. LTM revenue is approximately $325 million.

The main methodology used in these ratings was Medical Products and Devices published in October 2021 and available at https://ratings.moodys.com/api/rmc-documents/75796. Otherwise, please see the Scoring Methodologies page on https://ratings.moodys.com for a copy of this methodology.

REGULATORY INFORMATION

For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at https://ratings.moodys.com.

For all relevant securities or rated entities receiving direct credit support from the lead entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action , the associated regulatory information will be that of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to the jurisdiction: Ancillary services, Disclosures to the rated entity, Disclosures to be provided by the rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued without modification as a result of such disclosure.

These notes are solicited. Please refer to Moody’s Policy for the Designation and Assignment of Unsolicited Credit Ratings available on its website. https://ratings.moodys.com.

The regulatory information contained in this press release applies to the credit rating and, if applicable, the outlook or rating revision relating thereto.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis are available at https://ratings.moodys.com/documents/PBC_1288235.

The worldwide credit rating on this credit rating announcement was issued by one of Moody’s affiliates outside the EU and is approved by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main. -le-Main 60322, Germany, in accordance with Article 4(3) of Regulation (EC) No 1060/2009 on credit rating agencies. Further information on the EU approval status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the UK and is approved by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the United Kingdom. . Further information on the UK endorsement status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and Moody’s legal entity that issued the rating.

Please see the issuer/transaction page at https://ratings.moodys.com for additional regulatory information for each credit rating.

Kailash Chhaya, CFA
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Ola Hannoun-Costa
Associate General Manager
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Release Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

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Privacy Debt: The Hidden Scalability Killer https://sharewared.com/privacy-debt-the-hidden-scalability-killer/ Mon, 29 Aug 2022 16:01:58 +0000 https://sharewared.com/privacy-debt-the-hidden-scalability-killer/ In the software development space, there is a concept used to describe outstanding bugs and fixes that have not yet been applied to software, known as “technical debt”. Technical debt accumulates when there are small fixes to be made, but other larger, high-priority fixes or changes take priority. It can also refer to developing a […]]]>

In the software development space, there is a concept used to describe outstanding bugs and fixes that have not yet been applied to software, known as “technical debt”. Technical debt accumulates when there are small fixes to be made, but other larger, high-priority fixes or changes take priority. It can also refer to developing a feature “quick and dirty”, knowing that you will have to redevelop this feature later, which will accumulate this debt.

Having to reinvest in an existing product is not only a cost issue, but it also affects business scalability. Technical debt is an overhead that hovers above, waiting to appear at an inopportune time, often when you need to deliver functionality that depends on a previously deployed “quick fix”. This ends up requiring a lot more effort than expected due to the need to redevelop the previous patch as well as the new feature, potentially compromising an agreement or release and adding frustration to all teams involved.

A similar type of debt exists in the privacy space, and I would argue that it is less visible than debt in code. Code issues are usually tracked in an issue tracker, or at the very least there are (hopefully) comments added to the source code somewhere. Confidentiality debt is far more sinister, as you often don’t have visibility of it until it’s too late.

How does confidentiality debt accumulate?

Unlike the code, where debt accumulates due to a conscious decision and the awareness that it must be settled “at some time”, confidentiality debt can be accumulated due to ignorance. In many cases, debt first becomes visible when a potential customer submits a mandatory security assessment document as a precondition to completing a transaction.

Security assessments have, in the past, focused on just that: security. These days we see privacy added to these assessments or provided as separate assessments, particularly with a focus on GDPR (the General Data Protection Regulation) in Europe and the UK, the California Consumer Privacy Act and Bill 64 in Quebec. Suddenly, privacy policies and procedures have come to the fore instead of just products and features, as customers are forced to verify that your practices match your policy.

Since confidentiality debt is regularly underestimated, it can subtly accumulate. Companies mistakenly assume that privacy is just policy, when in fact, it’s about every facet of business and signals a new way of operating for many organizations. Even in organizations that are more conscious of their obligations, debt may increase on purpose, as confidentiality is viewed as grudge buying, implementing loads of paperwork, policies, and procedures for very little financial or business reward. . This is an insurance policy “just in case” things go wrong, which couldn’t be further from the truth. Privacy programs are about building a business in an ethical and scalable way, from top to bottom.

When Debt Affects Bottom Line

The longer you leave your current procedures in place, the more integrated they become. If your policies don’t take into account your regulatory privacy obligations, your teams won’t embed privacy principles into their day-to-day operations. This results in teams that incorporate insufficient (or even bad) procedures that are increasingly difficult to shake off. When you expand into a new market, work with a larger client, or enter a regulated industry, the turnaround becomes all the more difficult and slow.

In fact, the larger your organization becomes, the more confidentiality is needed. The more complex your product becomes, the greater your responsibility in terms of privacy impact assessments. The more information you collect, the harder it is to track and respond to individuals’ legal (and often constitutional) rights. Simply put, managing privacy reactively today puts you in a difficult position to grow tomorrow.

These situations can be like receiving a final demand letter for a credit card you didn’t know existed. When it comes to security, many fixes can be put in place quickly for requested assessments and often rely on existing policies and procedures within the company. Privacy, however, is a surprise and privacy programs are not implemented in days; they take months or even years.

Get rid of debt

Privacy debt most often takes the form of missing policies, insufficient procedures, a lack of awareness in the organization, and ultimately, a lack of visibility into the personal information a company handles. Tackling any of these (even individually) takes considerable effort, but if dealt with at a steady pace and addressed early, it is far from insurmountable or unaffordable.

A key approach to effectively dealing with privacy debt is to stop it from accumulating in the first place and start paying off the debt you already have. Privacy is not a destination; It’s a continuous process of investing and withdrawing, but once you get your payouts under control, it becomes manageable and can even be a competitive advantage.

To get to this point, you need to bring confidentiality to the discussion table and set up your payment plan. Privacy starts with awareness, and dealing with debt starts with factoring your privacy requirements into a defined roadmap that makes sense for your business. Confidentiality is not a one-time responsibility; the entire management team should be aware of their role in investing in confidentiality.

Being able to respond to feedback transparently and quickly reduces sales cycle turnaround times. Integrating privacy principles into the software development process reduces the cost of redeveloping non-compliant features. Inventorying your data allows you to respond to data requests and avoid fines. Having a comprehensive and mature program in place allows you to grow at scale without compromising the integrity of your customers’ privacy. Invest in your privacy and eliminate your debt, and scalability (from a privacy and security perspective) starts to manage itself.

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HPL Electric & Power (NSE: HPL) seems to be using debt quite wisely https://sharewared.com/hpl-electric-power-nse-hpl-seems-to-be-using-debt-quite-wisely/ Sat, 27 Aug 2022 02:32:14 +0000 https://sharewared.com/hpl-electric-power-nse-hpl-seems-to-be-using-debt-quite-wisely/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We can […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The biggest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We can see that HPL Electric & Power Limited (NSE: HPL) uses debt in its business. But the more important question is: what risk does this debt create?

What risk does debt carry?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. In the worst case, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. When we think about a company’s use of debt, we first look at cash and debt together.

Check out our latest analysis for HPL Electric & Power

What is HPL Electric & Power’s debt?

The graph below, which you can click on for more details, shows that HPL Electric & Power had a debt of ₹5.65 billion in March 2022; about the same as the previous year. However, since he has a cash reserve of ₹802.5 million, his net debt is lower at around ₹4.84 billion.

NSEI: HPL Debt to Equity History August 27, 2022

How strong is HPL Electric & Power’s balance sheet?

Latest balance sheet data shows that HPL Electric & Power had liabilities of ₹7.91 billion due within one year, and liabilities of ₹805.4 million falling due thereafter. On the other hand, it had a cash position of ₹802.5 million and ₹5.06 billion in receivables due within a year. Thus, its liabilities total ₹2.86 billion more than the combination of its cash and short-term receivables.

While that might sound like a lot, it’s not that bad since HPL Electric & Power has a market capitalization of ₹4.98 billion, and so it could probably strengthen its balance sheet by raising capital if needed. However, it is always worth taking a close look at its ability to repay debt.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Although we are not concerned about HPL Electric & Power’s net debt to EBITDA ratio of 3.1, we believe that its extremely low interest coverage of 1.5 times is a sign of high leverage. . It seems clear that the cost of borrowing money is having a negative impact on shareholder returns lately. On the bright side, HPL Electric & Power increased its EBIT by 39% last year. Like the milk of human kindness, this type of growth increases resilience, making the business more capable of managing debt. The balance sheet is clearly the area to focus on when analyzing debt. But it is the profits of HPL Electric & Power that will influence the balance sheet in the future. So, if you want to know more about its earnings, it may be worth checking out this graph of its long-term trend.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. So the logical step is to look at what proportion of that EBIT is actual free cash flow. Over the past three years, HPL Electric & Power has produced strong free cash flow equivalent to 59% of its EBIT, which is what we expected. This cold hard cash allows him to reduce his debt whenever he wants.

Our point of view

Based on our analysis, HPL Electric & Power’s EBIT growth rate should indicate that it will not have too many problems with its debt. But the other factors we noted above weren’t so encouraging. To be precise, he seems about as good at covering his interest costs with his EBIT as wet socks are at keeping your feet warm. When we consider all the factors mentioned above, we feel a bit cautious about HPL Electric & Power’s use of debt. While debt has its upside in higher potential returns, we think shareholders should certainly consider how debt levels could make the stock more risky. The balance sheet is clearly the area to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example, we have identified 3 warning signs for HPL Electric & Power (2 are significant) of which you should be aware.

In the end, sometimes it’s easier to focus on companies that don’t even need to take on debt. Readers can access a list of growth stocks with no net debt 100% freeat present.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Debt-ridden companies of the future face a second way to initiate insolvency https://sharewared.com/debt-ridden-companies-of-the-future-face-a-second-way-to-initiate-insolvency/ Wed, 24 Aug 2022 18:48:00 +0000 https://sharewared.com/debt-ridden-companies-of-the-future-face-a-second-way-to-initiate-insolvency/ Indebted Future Enterprises Ltd is now facing a second plea filed by an operating creditor of the company in the National Company Law Tribunal to commence insolvency proceedings. The latest petition is filed against Future Enterprises by Retail Detailz India, claiming default of Rs 4.02 crore before the Mumbai bench of the National Company […]]]>

Indebted Future Enterprises Ltd is now facing a second plea filed by an operating creditor of the company in the National Company Law Tribunal to commence insolvency proceedings.

The latest petition is filed against Future Enterprises by Retail Detailz India, claiming default of Rs 4.02 crore before the Mumbai bench of the National Company Law Tribunal (NCLT).

“The company has received an electronic filing confirmation from NCLT regarding the filing of a claim by an operational creditor Retailz India Private under Section 9 of the IBC for an alleged default amount of Rs 4.02 crore” , Future Enterprises said in a late statement. evening deposit on Tuesday.

No other date has been set so far for the hearing of said motion, he added.

Last week, another operational creditor, Foresight Innovations, filed a claim under Section 9 of the Insolvency and Bankruptcy Code (IBC) 2016, for an alleged default amount of Rs 1.58 crore before the Mumbai bench of the NCLT.

The next hearing date for this motion is August 26, 2022.

Section 9 of the IBC empowers operational creditors of a business to initiate a process to resolve the insolvency of the business in the event of default.

Operational creditors are those whose debt is due in respect of royalties arising from commercial operations. This primarily includes requests for delivery of goods or services and employment.

Future Enterprises, which is part of the Future Group led by Kishore Biyani, faces difficulties like the other companies in the group.

On Tuesday, its non-executive director Chandrapraksh Toshniwal resigned from the board.

Future Enterprises was among 19 group companies operating in the retail, wholesale, logistics and warehousing segments to be transferred to Reliance Retail under a Rs 24,713 deal crore announced in August 2020.

The deal was canceled by billionaire Mukesh Ambani, led by Reliance Industries Ltd in April.

It had recently defaulted on several interest payments on its several non-convertible debentures.

NCLT has already initiated insolvency proceedings against Future Group’s flagship company, Future Retail Ltd.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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