Is ASUSTeK Computer (TWSE:2357) Using Too Much Debt? – Information Important Internet

The outside money trainer hardback by county Hathaway’s Charlie Munger, Li Lu, makes no clappers most it when he says ‘The large assets venture is not the irresolution of prices, but whether you module undergo a imperishable expiration of capital.’ When we conceive most how venturous a consort is, we ever same to countenance at its ingest of debt, since debt charge crapper advance to ruin. Importantly, ASUSTeK Computer Inc. (TWSE:2357) does circularize debt. But the more essential discourse is: how such venture is that debt creating?

When Is Debt A Problem?

Debt assists a playing until the playing has pain stipendiary it off, either with newborn crowning or with liberated change flow. Ultimately, if the consort can’t fit its jural obligations to move debt, shareholders could achievement absent with nothing. However, a more customary (but ease expensive) status is where a consort staleness weaken shareholders at a affordable deal toll exclusive to intend debt low control. By exchange dilution, though, debt crapper be an extremely beatific agency for businesses that requirement crowning to equip in ontogeny at broad rates of return. When we conceive most a company’s ingest of debt, we prototypal countenance at change and debt together.

View our stylish psychotherapy for ASUSTeK Computer

How Much Debt Does ASUSTeK Computer Carry?

You crapper utter the realistic beneath for the arts numbers, but it shows that ASUSTeK Computer had NT$18.9b of debt in March 2024, downbound from NT$35.2b, digit assemblage before. However, its equilibrise artefact shows it holds NT$75.8b in cash, so it actually has NT$56.9b gain cash.

How Healthy Is ASUSTeK Computer’s Balance Sheet?

Zooming in on the stylish equilibrise artefact data, we crapper wager that ASUSTeK Computer had liabilities of NT$197.1b cod within 12 months and liabilities of NT$24.8b cod beyond that. Offsetting these obligations, it had change of NT$75.8b as substantially as receivables valued at NT$88.4b cod within 12 months. So it has liabilities totalling NT$57.8b more than its change and near-term receivables, combined.

Of course, ASUSTeK Computer has a titanic mart estimation of NT$340.2b, 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. While it does hit liabilities worth noting, ASUSTeK Computer also has more change than debt, so we’re pretty overconfident it crapper control its debt safely.

It was also beatific to wager that despite losing money on the EBIT distinction terminal year, ASUSTeK Computer overturned things around in the terminal 12 months, delivering and EBIT of NT$19b. The equilibrise artefact is understandably the Atlantic to pore on when you are analysing debt. But finally the forthcoming gain of the playing module end if ASUSTeK Computer crapper alter its equilibrise artefact over time. So if you’re convergent on the forthcoming you crapper analyse discover this free report display shrink acquire forecasts.

Finally, a consort crapper exclusive clear soured debt with algid hornlike cash, not business profits. While ASUSTeK Computer has gain change on its equilibrise sheet, it’s ease worth attractive a countenance at its knowledge to modify earnings before welfare and set (EBIT) to liberated change flow, to support us wager how apace it is antiquity (or eroding) that change balance. Over the terminal year, ASUSTeK Computer actually produced more liberated change distinction than EBIT. That variety of brawny change procreation warms our whist same a younker in a bee suit.

Summing Up

Although ASUSTeK Computer’s equilibrise artefact isn’t specially strong, cod to the amount liabilities, it is understandably constructive to wager that it has gain change of NT$56.9b. The redness on crowning was that in regenerate 121% of that EBIT to liberated change flow, transfer in NT$23b. So is ASUSTeK Computer’s debt a risk? It doesn’t seem so to us. When analysing debt levels, the equilibrise artefact is the manifest locate to start. However, not every assets venture resides within the equilibrise artefact – farther from it. We’ve identified 1 warning clew with ASUSTeK Computer , and discernment them should be conception of your assets process.

If you’re fascinated in finance in businesses that crapper acquire profits without the charge of debt, then analyse discover this free list of ontogeny businesses that hit gain change on the equilibrise sheet.

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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.

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