Yahoo Finance Is Radient Technologies Inc’s (CVE:RTI) Balance Sheet Strong Enough To Weather A Storm?
Investors are always looking for growth in small-cap stocks like Radient Technologies Inc (CVE:RTI), with a market cap of CA$313m. However, an important fact which most ignore is: how financially healthy is the business? Since RTI is loss-making right now, it’s vital to evaluate the current state of its operations and pathway to profitability. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. However, I know these factors are very high-level, so I suggest you dig deeper yourself into RTI here.
How does RTI’s operating cash flow stack up against its debt?
RTI has built up its total debt levels in the last twelve months, from CA$4m to CA$7m – this includes both the current and long-term debt. With this rise in debt, RTI’s cash and short-term investments stands at CA$18m , ready to deploy into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can take a look at some of RTI’s operating efficiency ratios such as ROA here.
Does RTI’s liquid assets cover its short-term commitments?
Looking at RTI’s most recent CA$3m liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 6.41x. However, a ratio greater than 3x may be considered as quite high.
Is RTI’s debt level acceptable?
RTI’s level of debt is appropriate relative to its total equity, at 24%. This range is considered safe as RTI is not taking on too much debt obligation, which may be constraining for future growth. Risk around debt is very low for RTI, and the company also has the ability and headroom to increase debt if needed going forward.
Next Steps:
RTI’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for RTI’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Radient Technologies to get a better picture of the stock by looking at:
Historical Performance: What has RTI’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
