Longalways - (4/1/2021 3:31:47 PM)
RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Zenabis Releases Year end 2020 QTR Report You cannot read a balance sheet without having two parts: assets and debts and within those you have to evaluate current and long term on both sides. It's simple accounting.
Level of leverage for both companies is very good , and a lot more when sales gowth . It's simple financial.
Any business afraid of debt should not be in business. Leverage by debt is cheaper that stock. As long as you generate enough cash by operations to sustain and pay and keep money to invest , operate and growth. You have to know what you do with debt.
I any one do that will see a much clearer picture and favorable ffor both and together including cash and cash equivalents that are very good. They report also a plan for a 24,8 M$/year sunergies also with this deal.
Stop focusing on debt only please
Well, I guess a more accurate statement would be that you can't focus on ANY one aspect of a companies financials - but debt load is critical, and in Zena's case it's crippling.
If you do want to look at assets - and talk aout simple accounting - Current Ratio is a standard measure of a companies ability to meet it's obligation (pay it's bills) a 2 to 1 or 3 to 1 are good ratios
In Zena's case - they show $96 million in Current Assets and $ 134 million in Current Liabilities (the term 'current' means the ability to convert to cash in one year), so they're in a negative ratio - they can't pay their bills.
Zena issue as not sales - it was debt.
The total liabilities & long term debt shown on the Balance Sheet $160 million - and the Interest Expense to service that debt - as shown on the Income Statement - was $24 million.
When Zena shows Gross Revenue of $60 million after tax - and Gross Margin of $34 million (which is before Operating Expenses are deducted) - how could any company possibly survive when $2.00 out of every $3.00 of gross sales goes directly to paying the debt?
Gross Margin $34 million
Interest Expense ($24) million
And THAT'S why you focus on the debt before you buy a company- it's simple accounting. And I even highlited to make it more simple for you!
Yer welcome