While small-cap stocks, such as Reliv’ International Inc (NASDAQ:RELV) with its market cap of US$9.34M, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Given that RELV is not presently profitable, it’s vital to evaluate the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Nevertheless, since I only look at basic financial figures, I suggest you dig deeper yourself into RELV here.
Does RELV generate enough cash through operations?
RELV’s debt levels have fallen from US$3.94M to US$2.91M over the last 12 months , which is made up of current and long term debt. With this reduction in debt, RELV currently has US$3.61M remaining in cash and short-term investments , ready to deploy into the business. Moreover, RELV has produced cash from operations of US$1.53M in the last twelve months, resulting in an operating cash to total debt ratio of 52.46%, indicating that RELV’s debt is appropriately covered by operating cash. This ratio can also be a sign of operational efficiency for unprofitable businesses as traditional metrics such as return on asset (ROA) requires a positive net income. In RELV’s case, it is able to generate 0.52x cash from its debt capital.
Can RELV pay its short-term liabilities?
Looking at RELV’s most recent US$4.62M liabilities, the company has been able to meet these obligations given the level of current assets of US$8.93M, with a current ratio of 1.93x. Usually, for Personal Products companies, this is a suitable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Can RELV service its debt comfortably?With a debt-to-equity ratio of 17.80%, RELV’s debt level may be seen as prudent. This range is considered safe as RELV is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. RELV’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.
RELV’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. In addition to this, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven’t considered other factors such as how RELV has been performing in the past. You should continue to research Reliv’ International to get a better picture of the stock by looking at:
- 1. Historical Performance: What has RELV’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.