While small-cap stocks, such as Cryptobloc Technologies Corp (CNSX:CRYP) with its market cap of CA$3.98m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Software companies, in particular ones that run negative earnings, are more likely to be higher risk. Assessing first and foremost the financial health is crucial. Here are few basic financial health checks you should consider before taking the plunge. However, since I only look at basic financial figures, I suggest you dig deeper yourself into CRYP here.
How does CRYP’s operating cash flow stack up against its debt?
CRYP’s debt levels have fallen from CA$88.51k to CA$40.57k over the last 12 months . With this debt payback, CRYP currently has CA$344.57k remaining in cash and short-term investments for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. 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 CRYP’s operating efficiency ratios such as ROA here.
Can CRYP pay its short-term liabilities?
With current liabilities at CA$457.71k, the company has been able to meet these commitments with a current assets level of CA$479.71k, leading to a 1.05x current account ratio. Generally, for Software companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Can CRYP service its debt comfortably?With debt at 1.09% of equity, CRYP may be thought of as having low leverage. CRYP is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. Risk around debt is extremely low for CRYP, and the company also has the ability and headroom to increase debt if needed going forward.
Although CRYP’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for CRYP’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Cryptobloc Technologies to get a more holistic view of the stock by looking at:
- Historical Performance: What has CRYP’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.