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What does Qumu Corporation’s (NASDAQ:QUMU) Balance Sheet Tell Us About Its Future?

Peter Morris

Qumu Corporation (NASDAQ:QUMU) is a small-cap stock with a market capitalization of US$20.54M. 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? Companies operating in the Internet industry, especially ones that are currently loss-making, tend to be high risk. Assessing first and foremost the financial health is crucial. I believe these basic checks tell most of the story you need to know. Though, since I only look at basic financial figures, I’d encourage you to dig deeper yourself into QUMU here.

Does QUMU generate enough cash through operations?

QUMU’s debt levels surged from US$7.30M to US$8.66M over the last 12 months – this includes both the current and long-term debt. With this rise in debt, the current cash and short-term investment levels stands at US$7.69M , 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 take a look at some of QUMU’s operating efficiency ratios such as ROA here.

Can QUMU pay its short-term liabilities?

With current liabilities at US$16.67M, it appears that the company is not able to meet these obligations given the level of current assets of US$15.21M, with a current ratio of 0.91x below the prudent level of 3x.

NasdaqCM:QUMU Historical Debt May 15th 18

Does QUMU face the risk of succumbing to its debt-load?

Since total debt levels have outpaced equities, QUMU is a highly leveraged company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. However, since QUMU is currently unprofitable, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.

Next Steps:

QUMU’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. In addition to this, its lack of liquidity raises questions over current asset management practices for the small-cap. I admit this is a fairly basic analysis for QUMU’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Qumu to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for QUMU’s future growth? Take a look at our free research report of analyst consensus for QUMU’s outlook.
  2. Valuation: What is QUMU 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 QUMU is currently mispriced by the market.
  3. 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.