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Stocks with market capitalization between $2B and $10B, such as Moderna, Inc. (NASDAQ:MRNA) with a size of US$5.2b, do not attract as much attention from the investing community as do the small-caps and large-caps. Surprisingly though, when accounted for risk, mid-caps have delivered better returns compared to the two other categories of stocks. Today we will look at MRNA’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. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into MRNA here.
MRNA’s Debt (And Cash Flows)
MRNA has built up its total debt levels in the last twelve months, from US$16m to US$33m , which accounts for long term debt. With this increase in debt, MRNA's cash and short-term investments stands at US$1.1b to keep the business going. Moving on, operating cash flow was negative over the last twelve months. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of MRNA’s operating efficiency ratios such as ROA here.
Can MRNA meet its short-term obligations with the cash in hand?
At the current liabilities level of US$159m, it seems that the business has been able to meet these commitments with a current assets level of US$1.1b, leading to a 7.17x current account ratio. The current ratio is the number you get when you divide current assets by current liabilities. However, a ratio above 3x may be considered excessive by some investors.
Does MRNA face the risk of succumbing to its debt-load?
MRNA’s level of debt is low relative to its total equity, at 2.3%. MRNA is not taking on too much debt commitment, which may be constraining for future growth. MRNA's risk around capital structure is almost non-existent, and the company has the headroom and ability to raise debt should it need to in the future.
Although MRNA’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 will be able to pay all of its upcoming liabilities from its current short-term assets. Keep in mind I haven't considered other factors such as how MRNA has been performing in the past. I suggest you continue to research Moderna to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MRNA’s future growth? Take a look at our free research report of analyst consensus for MRNA’s outlook.
- Historical Performance: What has MRNA'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.
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 firstname.lastname@example.org. 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.