Is Intertech Inter. Technologies (ATH: INTET) A risky investment?
David Iben put it well when he said, “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Above all, Intertech SA Inter. Technologies (ATH: INTET) carries the debt. But should shareholders be concerned about its use of debt?
Why Does Debt Bring Risk?
Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are ruthlessly liquidated by their bankers. However, a more common (but still painful) scenario is that he has to raise new equity at low cost, thereby constantly diluting shareholders. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. The first step in examining a company’s debt levels is to consider its cash flow and debt together.
Check out our latest review for Intertech Inter. Technologies
What is the amount of Intertech Inter. Are the technologies carrying?
As you can see below, at the end of June 2021, Intertech Inter. Technologies had a debt of 3.72 million euros, down from 2.39 million euros a year ago. Click on the image for more details. On the other hand, it has € 664.0 K in cash, leading to a net debt of around € 3.06 M.
How strong is Intertech Inter. Technology review?
By zooming in on the latest balance sheet data, we can see that Intertech Inter. Technologies had a liability of € 6.91 million due within 12 months and a liability of € 2.61 million due thereafter. In compensation for these commitments, he had cash of € 664.0 K as well as receivables valued at € 6.10 M due within 12 months. Its liabilities therefore amount to € 2.76 million more than the combination of its cash and short-term receivables.
While that might sound like a lot, it’s not that bad since Intertech Inter. Technologies has a market capitalization of 7.35 million euros and could therefore likely strengthen its balance sheet by raising capital if necessary. But we absolutely want to keep our eyes open for indications that its debt is too risky. The balance sheet is clearly the area to focus on when analyzing debt. But it’s Intertech Inter. The benefits of technologies that will influence the balance sheet in the future. So if you want to know more about its profits, it may be worth checking out this long term profit trend chart.
Over 12 months, Intertech Inter. Technologies achieved a turnover of 21 million euros, a gain of 2.5%, although it recorded no income before interest and taxes. This growth rate is a bit slow for our tastes, but it takes all types to make a world.
Above all, Intertech Inter. Technologies recorded a loss of earnings before interest and taxes (EBIT) during the past year. To be precise, the loss of EBIT amounted to 148 K €. When we look at this and recall the liabilities on its balance sheet, versus the cash flow, it seems unwise to us that the company has debt. Quite frankly, we think the record is far from up to par, although it could improve over time. Another reason for caution, € 1.4 million of negative free cash flow over the last twelve months has been bled. In short, it’s a really risky title. The balance sheet is clearly the area to focus on when analyzing debt. However, not all investment risks lie on the balance sheet – far from it. These risks can be difficult to spot. Every business has them, and we’ve spotted 2 warning signs for Intertech Inter. Technologies you should know.
At the end of the day, sometimes it’s easier to focus on businesses that don’t even need to go into debt. Readers can access a list of growth stocks with zero net debt 100% free, at present.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 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.