Yahoo Finance What You Must Know About BlackBerry Limited's (TSE:BB) Financial Health
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Small-cap and large-cap companies receive a lot of attention from investors, but mid-cap stocks like BlackBerry Limited (TSE:BB), with a market cap of CA$5.1b, are often out of the spotlight. However, history shows that overlooked mid-cap companies have performed better on a risk-adjusted manner than the smaller and larger segment of the market. Today we will look at BB’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into BB here.
Check out our latest analysis for BlackBerry
BB’s Debt (And Cash Flows)
BB has sustained its debt level by about US$793m over the last 12 months which accounts for long term debt. At this current level of debt, the current cash and short-term investment levels stands at US$847m to keep the business going. Moreover, BB has produced cash from operations of US$43m during the same period of time, leading to an operating cash to total debt ratio of 5.4%, meaning that BB’s operating cash is less than its debt.
Does BB’s liquid assets cover its short-term commitments?
With current liabilities at US$476m, the company has been able to meet these commitments with a current assets level of US$1.2b, leading to a 2.45x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. For Software companies, this ratio is within a sensible range since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Does BB face the risk of succumbing to its debt-load?
With debt at 25% of equity, BB may be thought of as appropriately levered. This range is considered safe as BB is not taking on too much debt obligation, which can be restrictive and risky for equity-holders.
Next Steps:
Although BB’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. This is only a rough assessment of financial health, and I'm sure BB has company-specific issues impacting its capital structure decisions. I suggest you continue to research BlackBerry to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BB’s future growth? Take a look at our free research report of analyst consensus for BB’s outlook.
Valuation: What is BB worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BB is currently mispriced by the market.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
