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Is CytRx Corporation’s (CYTR) Balance Sheet A Threat To Its Future?

CytRx Corporation (NASDAQ:CYTR) is a small-cap stock with a market capitalization of USD $59.70M. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? A major downturn in the energy industry has resulted in over 150 companies going bankrupt and has put more than 100 on the verge of a collapse, primarily due to excessive debt. Thus, it becomes utmost important for an investor to test a company’s resilience for such contingencies. In simple terms, I believe these three small calculations tell most of the story you need to know. See our latest analysis for CYTR

Does CYTR generate an acceptable amount of cash through operations?

NasdaqCM:CYTR Historical Debt Nov 7th 17
NasdaqCM:CYTR Historical Debt Nov 7th 17

While failure to manage cash has been one of the major reasons behind the demise of a lot of small businesses, mismanagement comes into the light during tough situations such as an economic recession. Furthermore, failure to service debt can hurt its reputation, making funding expensive in the future. We can test the impact of these adverse events by looking at whether cash from its current operations can pay back its current debt obligations. CYTR’s recent operating cash flow was -1.8 times its debt within the past year. This means what CYTR can generate on an annual basis, which is currently a negative value, does not cover what it actually owes its debtors in the near term. This raises a red flag, looking at CYTR’s operations at this point in time.

Can CYTR meet its short-term obligations with the cash in hand?

In addition to debtholders, a company must be able to pay its bills and salaries to keep the business running. In times of adverse events, CYTR may need to liquidate its short-term assets to pay these immediate obligations. We test for CYTR’s ability to meet these needs by comparing its cash and short-term investments with current liabilities. Our analysis shows that CYTR does have enough liquid assets on hand to meet its upcoming liabilities, which lowers our concerns should adverse events arise.

Is CYTR’s level of debt at an acceptable level?

Debt-to-equity ratio tells us how much of the asset debtors could claim if the company went out of business. CYTR’s debt-to-equity ratio exceeds 100%, which means that it is a highly leveraged company. This is not a problem if the company has consistently grown its profits. But during a business downturn, as liquidity may dry up, making it hard to operate.

Next Steps:

Are you a shareholder? CYTR’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. Though, its high liquidity ensures the company will continue to operate smoothly should unfavourable circumstances arise. Given that CYTR’s financial situation may change. I suggest keeping abreast of market expectations for CYTR’s future growth on our free analysis platform.

Are you a potential investor? CYTR’s high debt levels is not met with high cash flow coverage. This leaves room for improvement in terms of debt management and operational efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. As a following step, you should take a look at CYTR’s past performance analysis on our free platform to figure out CYTR’s financial health position.


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.

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