Yahoo Finance Is CSE Global Limited (SGX:544) A Financially Sound Company?
Investors are always looking for growth in small-cap stocks like CSE Global Limited (SGX:544), with a market cap of S$245.13M. However, an important fact which most ignore is: how financially healthy is the business? IT companies, especially ones that are currently loss-making, are more likely to be higher risk. Assessing first and foremost the financial health is vital. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Nevertheless, given that I have not delve into the company-specifics, I recommend you dig deeper yourself into 544 here.
How does 544’s operating cash flow stack up against its debt?
544’s debt levels surged from S$20.61M to S$31.41M over the last 12 months , which is mainly comprised of near term debt. With this rise in debt, the current cash and short-term investment levels stands at S$46.91M , ready to deploy into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can assess some of 544’s operating efficiency ratios such as ROA here.
Does 544’s liquid assets cover its short-term commitments?
With current liabilities at S$104.80M, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.14x. For IT companies, this ratio is within a sensible range since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Is 544’s debt level acceptable?
544’s level of debt is appropriate relative to its total equity, at 21.94%. This range is considered safe as 544 is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Investors’ risk associated with debt is very low with 544, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Next Steps:
544’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 exhibits an ability to meet its near term obligations should an adverse event occur. I admit this is a fairly basic analysis for 544’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research CSE Global to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 544’s future growth? Take a look at our free research report of analyst consensus for 544’s outlook.
Valuation: What is 544 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 544 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.
To help readers see pass 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.
