【what is an acas cot3 agreement】What Investors Should Know About Perfectech International Holdings Limited’s (HKG:765) Financial Strength
Zero-debt allows substantial financial flexibility,what is an acas cot3 agreement especially for small-cap companies like Perfectech International Holdings Limited (
HKG:765
), as the company does not have to adhere to strict debt covenants. However, it also faces higher cost of capital given interest cost is generally lower than equity. While zero-debt makes the due diligence for potential investors less nerve-racking, it poses a new question: how should they assess the financial strength of such companies? I will take you through a few basic checks to assess the financial health of companies with no debt.
Check out our latest analysis for Perfectech International Holdings
Is 765 growing fast enough to value financial flexibility over lower cost of capital?
Debt capital generally has lower cost of capital compared to equity funding. But the downside of having debt in a company’s balance sheet is the debtholder’s higher claim on its assets in the case of liquidation, as well as stricter capital management requirements. The lack of debt on 765’s balance sheet may be because it does not have access to cheap capital, or it may believe this trade-off is not worth it. Choosing financial flexibility over capital returns make sense if 765 is a high-growth company. Opposite to the high growth we were expecting, 765’s negative revenue growth of -36% hardly justifies opting for zero-debt. If the decline sustains, it may find it hard to raise debt at an acceptable cost.
SEHK:765 Historical Debt, March 1st 2019
Does 765’s liquid assets cover its short-term commitments?
Given zero long-term debt on its balance sheet, Perfectech International Holdings has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. At the current liabilities level of HK$33m, the company has been able to meet these obligations given the level of current assets of HK$125m, with a current ratio of 3.8x. Having said that, a ratio greater than 3x may be considered high by some.
Next Steps:
Having no debt on the books means 765 has more financial freedom to keep growing at its current fast rate. Since there is also no concerns around 765’s liquidity needs, this may be its optimal capital structure for the time being. Going forward, 765’s financial situation may change. This is only a rough assessment of financial health, and I’m sure 765 has company-specific issues impacting its capital structure decisions. I recommend you continue to research Perfectech International Holdings to get a better picture of the stock by looking at:
Story continues
Historical Performance
: What has 765’s returns been like over the past? Go into more detail in the past track record analysis and take a look at
the free visual representations of our analysis
for more clarity.
Other High-Performing Stocks
: Are there other stocks that provide better prospects with proven track records? Explore our
free list of these great stocks here
.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at
. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
View comments
下一篇:National CineMedia (NCMI) Jumps: Stock Rises 10.6%
相关文章:
- Is KB Financial Group, Inc. (KB) A Good Stock To Buy?
- 5 Stocks With Decent Growth Potential to Watch Ahead
- German carmakers had crisis call with Merkel: Handelsblatt
- CanWel Building Materials Group (TSE:CWX) Shareholders Have Felt Some Pain With A 19% Loss On Their Investment
- Key Things To Watch Out For If You Are After Richardson Electronics, Ltd.'s (NASDAQ:RELL) 6.7% Dividend
- Earnings Outlook for Manitowoc Co
- Payments on mortgages to be suspended across Italy after coronavirus outbreak
- ETFs Ways to Tap the Rise in Silver Price
- (APC) INVESTOR ALERT - Anadarko Petroleum Corporation - Bronstein, Gewirtz & Grossman, LLC Notifies Investors With Losses Exceeding $100K of Class Action and Lead Plaintiff Deadline: April 20, 2020
- Does The Equitable Group Inc. (TSE:EQB) Share Price Fall With The Market?
相关推荐:
- Genius Brands International Promotes Michael Jaffa to Chief Operating Officer
- Crypto Influencers Are Following the Beauty Playbook – Even if They Don’t Know It
- Survey Results: Investors Have No Idea Where The Market Is Headed Next
- DCP Midstream to Participate in Investor Conferences
- Top 5 Things to Know in the Market on Monday, June 1st
- INSIGHT-The religious retreat that sparked India's major coronavirus manhunt
- Look at American Airlines Stock Through a Wider Lens
- Pence will meet cruise industry officials Saturday on coronavirus
- Ingredion Incorporated Reports Third Quarter 2020 Results
- Wisconsin Father Hits 500,000 Push-up Milestone on the Path to Break World Record
- Do Hedge Funds Love Brooge Energy Limited (BROG)?
- What Does BNP Paribas Know That the Markets Don't?
- Thermon Group Holdings, Inc. to Host Earnings Call
- Unionized employees strike at Tasiast mine
- Is Now An Opportune Moment To Examine Unicaja Banco, S.A. (BME:UNI)?
- Antibodies, Protein-based Vaccines, Anti-virals, and Cell-based Therapies to Lead the Development of COVID-19 Treatment Pipeline- Exclusive Report by Meticulous Research®
- JPMorgan (JPM) Signs Deal to Acquire Fintech Start-up 55ip
- 7-Day Deadline Alert: The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against Zoom Video Communications, Inc. and Encourages Investors with Losses in Excess of $100,000 to Contact the Fir
- Insider Buying: The Viad Corp (NYSE:VVI) CEO, President & Director Just Bought US$220k Worth Of Shares
- This Broker Just Slashed Their Freelance.com SA (EPA:ALFRE) Earnings Forecasts