The article discusses the importance of considering a company’s debt levels when assessing its risk and potential for growth. It focuses on iRay Technology Company Limited (SHSE:688301), which has seen an increase in debt over the past year. While the company has a significant amount of debt, it also has cash reserves that offset a portion of this debt.
The article emphasizes the need to analyze a company’s balance sheet closely to determine its ability to handle debt obligations. It also discusses the importance of monitoring a company’s earnings and free cash flow to understand its financial health.
Despite some concerning factors, such as a decline in earnings and negative free cash flow, iRay Technology’s strong interest cover ratio suggests some resilience. However, the company may be taking on risks by continuing to increase its leverage.
Overall, the article concludes that iRay Technology may be taking on risks with its use of debt and advises caution when considering investing in the company. It also suggests that investors pay attention to factors beyond the balance sheet, such as industry trends and potential warning signs.
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