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If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. We aim to bring you long-term focused research analysis driven by fundamental data.

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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. If you are too, then click on this link right now to take a (free) peek at our list of reported insider transactions. We'd be very excited to see if Viemed Healthcare insiders have been snapping up shares. So we don't think Viemed Healthcare's use of debt is risky. The cherry on top was that in converted 123% of that EBIT to free cash flow, bringing in US$16m. While it is always sensible to look at a company's total liabilities, it is very reassuring that Viemed Healthcare has US$256k in net cash. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit. Over the last three years, Viemed Healthcare actually produced more free cash flow than EBIT. While Viemed Healthcare has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. So if you're focused on the future you can check out this free report showing analyst profit forecasts.įinally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. But it is future earnings, more than anything, that will determine Viemed Healthcare's ability to maintain a healthy balance sheet going forward. There's no doubt that we learn most about debt from the balance sheet. When we think about a company's use of debt, we first look at cash and debt together.Īnother good sign is that Viemed Healthcare has been able to increase its EBIT by 25% in twelve months, making it easier to pay down debt. Of course, plenty of companies use debt to fund growth, without any negative consequences. 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. If things get really bad, the lenders can take control of the business. 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. But the more important question is: how much risk is that debt creating? When Is Debt Dangerous? ( TSE:VMD) does have debt on its balance sheet. The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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.

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