Is, inc.’s (CVE:KSI) Balance Sheet A Threat To Its Future?

Investors are always looking for growth in small-cap stocks like, inc. (CVE:KSI), with a market cap of CA$51m. However, an important fact which most ignore is: how financially healthy is the business? Companies operating in the Healthcare Services industry, in particular ones that run negative earnings, tend to be high risk. Assessing first and foremost the financial health is vital. I believe these basic checks tell most of the story you need to know. However, given that I have not delve into the company-specifics, I recommend you dig deeper yourself into KSI here.

How does KSI’s operating cash flow stack up against its debt?

Over the past year, KSI has maintained its debt levels at around CA$980k including long-term debt. At this constant level of debt, KSI’s cash and short-term investments stands at CA$4.0m for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of KSI’s operating efficiency ratios such as ROA here.

Can KSI pay its short-term liabilities?

Looking at KSI’s CA$2.3m in current liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.17x. For Healthcare Services companies, this ratio is within a sensible range since there is a bit of a cash buffer without leaving too much capital in a low-return environment.

TSXV:KSI Historical Debt January 11th 19
TSXV:KSI Historical Debt January 11th 19

Does KSI face the risk of succumbing to its debt-load?

With debt at 11% of equity, KSI may be thought of as appropriately levered. KSI is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. KSI’s risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.

Next Steps:

KSI has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at a safe level. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure KSI has company-specific issues impacting its capital structure decisions. I recommend you continue to research to get a better picture of the stock by looking at:

  1. Historical Performance: What has KSI’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.
  2. 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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at