![]() Click here for an interactive snapshot.īut our final consideration is also important, because a company cannot pay debt with paper profits it needs cold hard cash. ![]() So when considering debt, it's definitely worth looking at the earnings trend. ![]() But you can't view debt in total isolation since Grown Rogue International will need earnings to service that debt. The balance sheet is clearly the area to focus on when you are analysing debt. Notably, Grown Rogue International made a loss at the EBIT level, last year, but improved that to positive EBIT of US$3.7m in the last twelve months. So we'd recommend keeping a close eye on the impact financing costs are having on the business. While Grown Rogue International's low debt to EBITDA ratio of 0.40 suggests only modest use of debt, the fact that EBIT only covered the interest expense by 3.7 times last year does give us pause. This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it. In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. While this might seem like a lot, it is not so bad since Grown Rogue International has a market capitalization of US$10.3m, and so it could probably strengthen its balance sheet by raising capital if it needed to. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$5.95m. Offsetting these obligations, it had cash of US$1.82m as well as receivables valued at US$1.00m due within 12 months. The latest balance sheet data shows that Grown Rogue International had liabilities of US$5.46m due within a year, and liabilities of US$3.31m falling due after that. CNSX:GRIN Debt to Equity History September 17th 2022 How Strong Is Grown Rogue International's Balance Sheet? ![]() On the flip side, it has US$1.82m in cash leading to net debt of about US$1.64m. View our latest analysis for Grown Rogue International How Much Debt Does Grown Rogue International Carry?Īs you can see below, at the end of April 2022, Grown Rogue International had US$3.45m of debt, up from US$1.48m a year ago. The first step when considering a company's debt levels is to consider its cash and debt together. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. If things get really bad, the lenders can take control of the business. Why Does Debt Bring Risk?ĭebt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. But the real question is whether this debt is making the company risky. ( CSE:GRIN) does use debt in its business. We can see that Grown Rogue International Inc. Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. ![]()
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