David Iben put it well when he said, “Volatility is not a risk that interests us. Our aim is to avoid the permanent loss of capital. ‘ It is only natural to consider a company’s balance sheet when considering how risky it is, as debt is often at play when a company breaks down. As with many other companies Aspira Women’s Health Inc. (NASDAQ: AWH) leverages debt. But the more important question is, what is the risk this debt entails?
When is debt dangerous?
Debt is a tool to help businesses grow, but when a business is unable to pay off its lenders it is at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still more painful) scenario is that it needs to raise new equity at a low price, permanently diluting shareholders. Of course, many companies use debt to fund their growth without any negative consequences. The first thing to do when considering how much debt a company uses is to put its cash and debt together.
Check out our latest analysis for Aspira Women’s Health
What is Aspira Women’s Health’s Debt?
The image below, which you can click for more details, shows that Aspira Women’s Health was in debt of $ 3.22 million in June 2021, down from $ 2.20 million in a year. On the flip side, it also has $ 53.0 million in cash, resulting in a net cash position of $ 49.8 million.
NasdaqCM: AWH Debt-to-Equity History September 24, 2021
How healthy is Aspira Women’s Health’s bottom line?
According to the most recently published balance sheet, Aspira Women’s Health had liabilities of $ 5.79 million due within 12 months and liabilities of $ 3.20 million due beyond 12 months. This was offset by $ 53.0 million in cash and $ 1.07 million in receivables due within 12 months. So it actually has $ 45.1 million more cash than its total debt.
That excess suggests that Aspira Women’s Health has a conservative record and could likely get its debt down without much difficulty. Put simply, the fact that Aspira Women’s Health has more money than debt is arguably a good indication that it can safely manage its debt. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will determine whether Aspira Women’s Health can strengthen its balance sheet over time. So if you are focused on the future, this is what you can check out here for free Analyst earnings forecast report.
Last year Aspira Women’s Health was not profitable on an EBIT level, but was able to increase sales by 31% to USD 6.0 million. Shareholders should keep their fingers crossed that it can develop into profits.
How Risky Is Aspira Women’s Health?
Statistically, companies that lose money are riskier than those that make money. And last year, Aspira Women’s Health had lost earnings before interest and taxes (EBIT), to tell the truth. In fact, it burned $ 20 million in cash and made a loss of $ 23 million during that time. With only $ 49.8 million in net cash, the company may need to raise more capital if it doesn’t break even soon. Aspira Women’s Health’s sales growth has been good over the past year, so it may well be able to turn a profit in due course. By investing before those profits, shareholders take more risks in the hope of bigger profits. Undoubtedly, we learn most about balance sheet debt. However, not all of the investment risk is on the balance sheet – on the contrary. For example we discovered 4 warning signs for Aspira Women’s Health (1 is Worrying!) Things to Consider Before Investing Here.
If you’re interested in investing in companies that can grow profits without the burden of debt, then this is the place to be for free List of growing companies that have net cash on their balance sheet.
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This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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source https://www.bisayanews.com/2021/09/24/aspira-womens-health-nasdaqawh-has-debt-but-no-earnings-should-you-worry/
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