What You Must Know About Puma Biotechnology Inc’s (NASDAQ:PBYI) Financial Health
Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as Puma Biotechnology Inc (NASDAQ:PBYI) with a market capitalization of $3.95B, rarely draw their attention from analysts and investors. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. I will take you through a few basic checks to assess the financial health of companies with no debt. View our latest analysis for Puma Biotechnology
Can PBYI service its debt comfortably?
A substantially higher debt poses a significant threat to a company’s profitability during a downturn. For PBYI, the debt-to-equity ratio is zero, meaning that the company has no debt. It has been operating its business with zero debt and utilising only its equity capital. Whether it’s an issue of access to debt or management choosing not to borrow, investors risk associated with debt issues is virtually non-existent with PBYI.
Can PBYI meet its short-term obligations with the cash in hand?
Given zero long-term debt on its balance sheet, Puma Biotechnology has no solvency issues. Solvency is the company’s ability to meet its long-term obligations. However, another measure of financial health is its short-term obligations, which is known as liquidity. These include payments to suppliers, employees and other stakeholders. If an adverse event occurs, the company may be forced to pay these immediate expenses with its liquid assets. Our analysis shows that PBYI does have enough liquid assets on hand to meet its upcoming liabilities, which lowers our concerns should adverse events arise.
Next Steps:
Are you a shareholder? PBYI has no debt as well as ample cash to cover its near-term liabilities such as salary and supplier payments. While it’s safe operations might reduce risk for the company and investors, some degree of debt could also boost earnings growth and operational efficiency. Since PBYI’s capital structure may be different in the future, You should continue examining market expectations for PBYI’s future growth on our free analysis platform.
Are you a potential investor? Although understanding the serviceability of debt is important when evaluating which companies are viable investments, it shouldn’t be the deciding factor. Ultimately, debt is often used to fund or accelerate new projects that are expected to improve a company’s growth trajectory in the longer term. PBYI’s Return on Capital Employed (ROCE) in order to see management’s track record at deploying funds in high-returning projects.
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.
