Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as Yangtze River Port and Logistics Limited (NASDAQ:YRIV), with a market capitalization of US$2.0b, rarely draw their attention from the investing community. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Let’s take a look at YRIV’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into YRIV here.
How much cash does YRIV generate through its operations?
YRIV’s debt levels surged from US$117m to US$126m over the last 12 months – this includes both the current and long-term debt. With this increase in debt, YRIV currently has US$131k remaining in cash and short-term investments , ready to deploy 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. For this article’s sake, I won’t be looking at this today, but you can examine some of YRIV’s operating efficiency ratios such as ROA here.
Can YRIV meet its short-term obligations with the cash in hand?
At the current liabilities level of US$70m liabilities, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 5.62x. However, many consider anything above 3x to be quite high.
Is YRIV’s debt level acceptable?
YRIV is a relatively highly levered company with a debt-to-equity of 67%. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. However, since YRIV is presently unprofitable, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
At its current level of cash flow coverage, YRIV has room for improvement to better cushion for events which may require debt repayment. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. This is only a rough assessment of financial health, and I’m sure YRIV has company-specific issues impacting its capital structure decisions. You should continue to research Yangtze River Port and Logistics to get a more holistic view of the stock by looking at:
- Historical Performance: What has YRIV’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.
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 firstname.lastname@example.org.