Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” So it can be obvious that you need to consider debt, when you think about how risky a given stock is because too much debt can sink a business. Mostly, TG Therapeutics, Inc. (NASDAQ: TGTX) carries debt. But should shareholders be concerned about its use of debt?
Why Does Debt Bring Risk?
Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. If things really go wrong, lenders can take over the business. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. By replacing dilution, however, debt can be a very good tool for companies that need capital to invest in growth at high rates of return. When we look at debt levels, we first consider both liquidity and debt levels.
Check out our latest review for TG Therapeutics
What is the debt of TG Therapeutics?
You can click on the graph below for historical figures, but it shows that as of March 2021, TG Therapeutics had a debt of US $ 31.0 million, an increase from US $ 29.4 million. , over one year. But on the other hand, it also has $ 523.8 million in cash, which leads to a net cash position of $ 492.8 million.
How healthy is TG Therapeutics’ track record?
The latest balance sheet data shows that TG Therapeutics had a liability of $ 92.5 million due within one year, and a liability of $ 10.9 million due thereafter. On the other hand, he had US $ 523.8 million in cash and US $ 771.0,000 in receivables due within one year. So he actually has $ 421.2 million After liquid assets as total liabilities.
This surplus suggests that TG Therapeutics has a prudent balance sheet and could likely eliminate its debt without too much difficulty. Put simply, the fact that TG Therapeutics has more cash than debt is arguably a good indication that it can safely manage its debt. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether TG Therapeutics can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free Analyst Profit Forecast report interesting.
Over 12 months, TG Therapeutics reported sales of $ 907,000, a gain of 497%, although it reported no profit before interest and taxes. When it comes to revenue growth, it’s like winning the game by earning 3 points!
So how risky is TG Therapeutics?
We are convinced that loss-making companies are, in general, riskier than profitable companies. And we note that TG Therapeutics has recorded a loss of earnings before interest and taxes (EBIT) over the past year. And during the same period, it recorded negative free cash outflows of US $ 234 million and a book loss of US $ 319 million. With just $ 492.8 million on the balance sheet, it looks like it will soon have to raise capital again. It is important to note that TG Therapeutics’ revenue growth is coming. While unprofitable businesses can be risky, they can also grow quickly and rapidly during those pre-profit years. 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 off the balance sheet. To this end, you should inquire about the 2 warning signs we spotted with TG Therapeutics (including 1 which is worrying).
If you are interested in investing in companies that can generate profits without the burden of debt, check out this page free list of growing companies that have net cash on the balance sheet.
Promoted
If you are looking to trade TG Therapeutics, open an account with the cheapest * professional approved platform, Interactive Brokers. Their clients from more than 200 countries and territories trade stocks, options, futures, currencies, bonds and funds around the world from a single integrated account.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.
