Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Greattown Holdings Ltd. (SHSE:900940) does use debt in its business. But the real question is whether this debt is making the company risky.
What Risk Does Debt Bring?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
View our latest analysis for Greattown Holdings
What Is Greattown Holdings's Net Debt?
The image below, which you can click on for greater detail, shows that Greattown Holdings had debt of CN¥8.46b at the end of June 2022, a reduction from CN¥11.2b over a year. However, because it has a cash reserve of CN¥4.29b, its net debt is less, at about CN¥4.17b.
SHSE:900940 Debt to Equity History September 29th 2022
A Look At Greattown Holdings' Liabilities
The latest balance sheet data shows that Greattown Holdings had liabilities of CN¥20.0b due within a year, and liabilities of CN¥6.19b falling due after that. Offsetting these obligations, it had cash of CN¥4.29b as well as receivables valued at CN¥848.7m due within 12 months. So it has liabilities totalling CN¥21.0b more than its cash and near-term receivables, combined.
This deficit casts a shadow over the CN¥7.38b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. At the end of the day, Greattown Holdings would probably need a major re-capitalization if its creditors were to demand repayment. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Greattown Holdings'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.
Over 12 months, Greattown Holdings made a loss at the EBIT level, and saw its revenue drop to CN¥5.5b, which is a fall of 52%. To be frank that doesn't bode well.
Caveat Emptor
Not only did Greattown Holdings's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at CN¥440m. Combining this information with the significant liabilities we already touched on makes us very hesitant about this stock, to say the least. That said, it is possible that the company will turn its fortunes around. But we think that is unlikely since it is low on liquid assets, and made a loss of CN¥623m in the last year. So while it's not wise to assume the company will fail, we do think it's risky. 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. We've identified 2 warning signs with Greattown Holdings (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
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.
巴菲特(Warren Buffett)曾説過一句名言：波動性遠非風險的代名詞。當你考察一家公司的風險有多大時，考慮它的資產負債表是很自然的，因為當一家企業倒閉時，債務往往會涉及到它。我們可以看到大城控股有限公司(上海證券交易所：900940)確實在其業務中使用債務。但真正的問題是，這筆債務是否讓該公司面臨風險。
債務會帶來什麼風險？
債務幫助企業，直到企業難以償還債務，無論是用新資本還是用自由現金流。最終，如果公司不能履行其償還債務的法定義務，股東可能會一無所有地離開。然而，一種更常見(但仍令人痛苦)的情景是，它不得不以低價籌集新的股本，從而永久性地稀釋股東。當然，許多公司利用債務為增長提供資金，沒有任何負面後果。當我們檢查債務水平時，我們首先同時考慮現金和債務水平。
查看我們對Greattown Holdings的最新分析
Greattown Holdings的淨債務是多少？
下圖顯示，截至2022年6月底，Greattown Holdings的債務為84.6億加元，較一年內的112億加元有所減少。你可以點擊查看更多細節。然而，由於其現金儲備為42.9億加元，其淨債務較少，約為41.7億加元。
上證綜指：900940債轉股歷史2022年9月29日
看Greattown Holdings的負債情況
最新的資產負債表數據顯示，大城控股有200億加元的負債在一年內到期，61.9億加元的負債在一年內到期。為了抵消這些債務，該公司有42.9億加元的現金和8.487億加元的應收賬款在12個月內到期。因此，該公司的負債總額為人民幣210億元，超過了現金和近期應收賬款的總和。
這一赤字給這家73.8億元人民幣的公司蒙上了一層陰影，就像一個龐然大物聳立在凡人之上。因此，毫無疑問，我們會密切關注它的資產負債表。歸根結底，如果債權人要求償還債務，Greattown Holdings可能需要進行大規模的資本重組。在分析債務水平時，資產負債表顯然是一個起點。但決定Greattown Holdings未來保持健康資產負債表能力的是未來的收益，而不是任何東西。所以，如果你關注未來，你可以看看這個免費顯示分析師利潤預測的報告。
在過去的12個月裏，Greattown Holdings在息税前利潤水平上出現了虧損，收入下降到55億加元，跌幅為52%。坦率地説，這不是一個好兆頭。
告誡買入者
Greattown Holdings不僅在過去12個月中收入下滑，而且息税前收益(EBIT)也出現了負增長。具體地説，息税前虧損為4.4億加元。將這一信息與我們已經觸及的重大負債結合在一起，至少可以説，讓我們對這隻股票非常猶豫。話雖如此，該公司仍有可能扭轉頹勢。但我們認為這不太可能，因為它的流動資產很低，而且去年虧損了6.23億元。因此，儘管假設公司會倒閉是不明智的，但我們確實認為這是有風險的。在分析債務水平時，資產負債表顯然是一個起點。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。我們已經確定了兩個警告信號對於Greattown Holdings(至少有1家不能忽視)，瞭解他們應該是你投資過程的一部分。
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。
