While small-cap stocks, such as MYnd Analytics, Inc. (NASDAQ:MYND) with its market cap of US$7.8m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Companies operating in the Healthcare Services industry, in particular ones that run negative earnings, are more likely to be higher risk. Evaluating financial health as part of your investment thesis is essential. Here are few basic financial health checks you should consider before taking the plunge. Though, since I only look at basic financial figures, I suggest you dig deeper yourself into MYND here.
How does MYND’s operating cash flow stack up against its debt?
MYND’s debt levels surged from US$36k to US$591k over the last 12 months , which includes long-term debt. With this growth in debt, the current cash and short-term investment levels stands at US$3.3m for investing 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 examine some of MYND’s operating efficiency ratios such as ROA here.
Can MYND meet its short-term obligations with the cash in hand?
With current liabilities at US$1.2m, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 3.01x. However, a ratio above 3x may be considered excessive by some investors.
Does MYND face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 18%, MYND’s debt level may be seen as prudent. MYND is not taking on too much debt commitment, which may be constraining for future growth. Investors’ risk associated with debt is very low with MYND, and the company has plenty of headroom and ability to raise debt should it need to in the future.
MYND’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. In addition to this, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for MYND’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research MYnd Analytics to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MYND’s future growth? Take a look at our free research report of analyst consensus for MYND’s outlook.
- Historical Performance: What has MYND’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.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.