Legendary fund manager Li Lu (who was backed by Charlie Munger) once said, “The biggest investment risk is not price volatility, but whether you will suffer a permanent capital loss.” It is natural to consider a company’s balance sheet when analyzing the risk it has, as there are often debts when a business collapses. As with many other companies Aspira Women’s Health Inc. (NASDAQ: AWH) makes use of debt. But the most important question is: how much risk does this debt create?
Why does debt involve risk?
Debt is a tool to help companies grow, but if a company is unable to pay its lenders, it exists at its mercy. Ultimately, if the company is unable to meet its legal obligations to repay the debt, shareholders could leave with nothing. However, a more common (but still costly) fact is when a company has to issue shares at underground prices, permanently diluting shareholders, just to bolster its balance sheet. Of course, debt can be an important tool in companies, especially heavy capital companies. The first thing to do when considering the amount of debt a company uses is to look at its debt and its debt together.
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How much debt does Aspira’s health have?
You can click on the chart below to get the historical numbers, but it shows that as of March 2021 Aspira Women’s Health had debt of US $ 4.48 million, an increase of US $ 1.24 million over one year. Still, it has $ 59.4 million to offset that, which is net cash of $ 54.9 million.
How strong is the balance of Aspira Health Health?
We can see from the most recent balance sheet that Aspira Women’s Health had liabilities of US $ 6.15 million outstanding for one year, and liabilities of US $ 3.82 million later. Compensating for this, he had $ 59.4 million in cash and $ 952.0 million in accounts receivable that were due within 12 months. Therefore, it can count on US $ 50.3 million of liquid assets more than total liabilities.
The story goes on
This surplus suggests that Aspira Women’s Health has a conservative balance sheet and could probably eliminate its debt without much difficulty. Simply put, Aspira Women’s Health has net cash, so it’s fair to say it doesn’t have a high debt load. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the future profitability of the business will decide whether Aspira Women’s Health can bolster its balance sheet over time. So if you’re focused on the future, you can check it out Free report showing analysts ’earnings forecasts.
Last year, Aspira Women’s Health revenue was quite low and they earned a negative EBIT. While that’s hardly impressive, it’s not bad at all either.
What is the health risk of Aspira women?
Statistically, companies that lose money are riskier than those that make money. And it is that, during the last twelve months, Aspira Women’s Health lost money with the gains before the line of interest and taxes (EBIT). In fact, at the time it burned $ 15 million in cash and caused a loss of $ 20 million. With only US $ 54.9 million on the balance sheet, it looks like capital will need to be raised again soon. Overall, their balance sheet doesn’t seem overly risky at the moment, but we’re always cautious until we see positive free cash flow. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risk lies in the balance sheet, much less. For example – Aspira Health Health has 4 warning signs we think you should be aware of that.
If you are interested in investing in companies that can increase profits without burdening debt, check it out. Free list of growing companies that have net cash on the balance sheet.
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