Does Liberty Braves Group (NASDAQ:BATR.K) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. Importantly, The Liberty Braves Group (NASDAQ:BATR.K) does carry debt. But is this debt a concern to shareholders?

When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

See our latest analysis for Liberty Braves Group

What Is Liberty Braves Group's Debt?

The chart below, which you can click on for greater detail, shows that Liberty Braves Group had US$672.0m in debt in March 2021; about the same as the year before. On the flip side, it has US$181.0m in cash leading to net debt of about US$491.0m.

A Look At Liberty Braves Group's Liabilities

Zooming in on the latest balance sheet data, we can see that Liberty Braves Group had liabilities of US$219.0m due within 12 months and liabilities of US$1.12b due beyond that. Offsetting these obligations, it had cash of US$181.0m as well as receivables valued at US$25.0m due within 12 months. So its liabilities total US$1.13b more than the combination of its cash and short-term receivables.

This is a mountain of leverage relative to its market capitalization of US$1.43b. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Liberty Braves Group can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Given it has no significant operating revenue at the moment, shareholders will be hoping Liberty Braves Group can make progress and gain better traction for the business, before it runs low on cash.

Caveat Emptor

Not only did Liberty Braves Group's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at US$124m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$97m of cash over the last year. So suffice it to say we consider the stock very risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Liberty Braves Group you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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