Does TG Therapeutics (NASDAQ:TGTX) Have A Healthy Balance Sheet?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, TG Therapeutics, Inc. (NASDAQ:TGTX) does carry debt. But the more important question is: how much risk is that debt creating?

Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

Check out our latest analysis for TG Therapeutics

What Is TG Therapeutics's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2023 TG Therapeutics had US$99.1m of debt, an increase on US$70.2m, over one year. But it also has US$229.2m in cash to offset that, meaning it has US$130.1m net cash.

How Strong Is TG Therapeutics' Balance Sheet?

The latest balance sheet data shows that TG Therapeutics had liabilities of US$57.7m due within a year, and liabilities of US$108.6m falling due after that. Offsetting these obligations, it had cash of US$229.2m as well as receivables valued at US$39.3m due within 12 months. So it can boast US$102.2m more liquid assets than total liabilities.

This surplus suggests that TG Therapeutics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that TG Therapeutics has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if TG Therapeutics can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Over 12 months, TG Therapeutics reported revenue of US$190m, which is a gain of 3,676%, although it did not report any earnings before interest and tax. When it comes to revenue growth, that's like nailing the game winning 3-pointer!

So How Risky Is TG Therapeutics?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that TG Therapeutics had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of US$42m and booked a US$26m accounting loss. With only US$130.1m on the balance sheet, it would appear that its going to need to raise capital again soon. Importantly, TG Therapeutics's revenue growth is hot to trot. High growth pre-profit companies may well be risky, but they can also offer great rewards. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for TG Therapeutics you should know about.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.