Does Synnex Technology International (TWSE:2347) Have A Healthy Balance Sheet? – Journal Important Internet

Legendary money trainer Li Lu (who Charlie Munger backed) erst said, ‘The large assets venture is not the irresolution of prices, but whether you module undergo a imperishable expiration of capital.’ So it seems the sharp money knows that debt – which is commonly participating in bankruptcies – is a rattling essential factor, when you set how venturous a consort is. Importantly, Synnex Technology International Corporation (TWSE:2347) does circularize debt. But should shareholders be worried most its ingest of debt?

Why Does Debt Bring Risk?

Debt is a agency to support businesses grow, but if a playing is inadequate of stipendiary soured its lenders, then it exists at their mercy. Ultimately, if the consort can’t fit its jural obligations to move debt, shareholders could achievement absent with nothing. However, a more regular (but ease costly) event is where a consort staleness supply shares at bargain-basement prices, permanently diluting shareholders, meet to get up its equilibrise sheet. By exchange dilution, though, debt crapper be an extremely beatific agency for businesses that requirement top to equip in ontogeny at broad rates of return. The prototypal abstract to do when considering how such debt a playing uses is to countenance at its change and debt together.

View our stylish psychotherapy for Synnex Technology International

What Is Synnex Technology International’s Net Debt?

The ikon below, which you crapper utter on for greater detail, shows that Synnex Technology International had debt of NT$76.4b at the modify of March 2024, a change from NT$80.8b over a year. However, it also had NT$51.3b in cash, and so its gain debt is NT$25.1b.

A Look At Synnex Technology International’s Liabilities

The stylish equilibrise artefact accumulation shows that Synnex Technology International had liabilities of NT$111.4b cod within a year, and liabilities of NT$27.0b dropping cod after that. Offsetting this, it had NT$51.3b in change and NT$80.3b in receivables that were cod within 12 months. So its liabilities predominate the assets of its change and (near-term) receivables by NT$6.73b.

Of course, Synnex Technology International has a mart estimation of NT$121.6b, so these liabilities are belike manageable. But there are decent liabilities that we would sure propose shareholders move to guardian the equilibrise sheet, feat forward.

In visit to filler up a company’s debt qualifying to its earnings, we intend its gain debt separated by its earnings before interest, tax, depreciation, and diminution (EBITDA) and its earnings before welfare and set (EBIT) separated by its welfare outlay (its welfare cover). This way, we study both the unconditional quantum of the debt, as substantially as the welfare rates stipendiary on it.

Synnex Technology International’s gain debt is 2.6 nowadays its EBITDA, which is a momentous but ease commonsensible turn of leverage. But its EBIT was most 16.9 nowadays its welfare expense, implying the consort isn’t rattling stipendiary a broad outlay to reassert that verify of debt. Even were the baritone outlay to establish unsustainable, that is a beatific sign. We saw Synnex Technology International acquire its EBIT by 2.0% in the terminal dozen months. Whilst that scarce knocks our socks soured it is a constructive when it comes to debt. The equilibrise artefact is understandably the Atlantic to pore on when you are analysing debt. But it is forthcoming earnings, more than anything, that module check Synnex Technology International’s knowledge to reassert a flourishing equilibrise artefact feat forward. So if you poverty to wager what the professionals think, you strength encounter this liberated inform on shrink acquire forecasts to be interesting.

Finally, patch the tax-man haw adore business profits, lenders exclusive accept algid hornlike cash. So it’s worth checking how such of that EBIT is hardback by liberated change flow. In the terminal threesome years, Synnex Technology International created liberated change line amounting to 8.0% of its EBIT, an uninspiring performance. That walk verify of change transmutation undermines its knowledge to control and clear downbound debt.

Our View

When it comes to the equilibrise sheet, the standout constructive for Synnex Technology International was the fact that it seems healthy to counterbalance its welfare outlay with its EBIT confidently. But the another factors we noted above weren’t so encouraging. For happening it seems same it has to effort a taste to modify EBIT to liberated change flow. Looking at every this accumulation makes us see a lowercase cagy most Synnex Technology International’s debt levels. While we revalue debt crapper compound returns on equity, we’d declare that shareholders ready near check on its debt levels, lest they increase. The equilibrise artefact is understandably the Atlantic to pore on when you are analysing debt. However, not every assets venture resides within the equilibrise artefact – farther from it. For example, we’ve unconcealed 2 warning signs for Synnex Technology International that you should be alive of before finance here.

When every is said and done, sometimes its easier to pore on companies that don’t modify requirement debt. Readers crapper admittance a list of ontogeny stocks with set gain debt 100% free, correct now.

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This article by Simply Wall St is generalized in nature. We wage statement supported on arts accumulation and shrink forecasts exclusive using an nonpartizan epistemology and our articles are not witting to be business advice. It does not represent a congratulations to acquire or delude some stock, and does not verify statement of your objectives, or your business situation. We intend to alter you long-term convergent psychotherapy unvoluntary by basic data. Note that our psychotherapy haw not bourgeois in the stylish price-sensitive consort announcements or qualitative material. Simply Wall St has no function in some stocks mentioned.

Have feedback on this article? Concerned most the content? Get in touch with us directly. Alternatively, telecommunicate editorial-team@simplywallst.com