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Is Symantec Corporation’s (NASDAQ:SYMC) Balance Sheet Strong Enough To Weather A Storm?

Terrence Jolly

Investors pursuing a solid, dependable stock investment can often be led to Symantec Corporation (NASDAQ:SYMC), a large-cap worth US$17.28B. Doing business globally, large caps tend to have diversified revenue streams and attractive capital returns, making them desirable investments for risk-averse portfolios. But, the key to their continued success lies in its financial health. I will provide an overview of Symantec’s financial liquidity and leverage to give you an idea of Symantec’s position to take advantage of potential acquisitions or comfortably endure future downturns. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into SYMC here. View our latest analysis for Symantec

How much cash does SYMC generate through its operations?

SYMC’s debt levels surged from US$2.21B to US$8.19B over the last 12 months , which comprises of short- and long-term debt. With this rise in debt, the current cash and short-term investment levels stands at US$4.26B for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can assess some of SYMC’s operating efficiency ratios such as ROA here.

Does SYMC’s liquid assets cover its short-term commitments?

At the current liabilities level of US$4.62B liabilities, it appears that the company has been able to meet these obligations given the level of current assets of US$5.32B, with a current ratio of 1.15x. Usually, for Software companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.

NasdaqGS:SYMC Historical Debt May 1st 18

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

With total debt exceeding equities, Symantec is considered a highly levered company. This is not unusual for large-caps since debt tends to be less expensive than equity because interest payments are tax deductible. Accordingly, large companies often have an advantage over small-caps through lower cost of capital due to cheaper financing. No matter how high the company’s debt, if it can easily cover the interest payments, it’s considered to be efficient with its use of excess leverage. Net interest should be covered by earnings before interest and tax (EBIT) by at least three times to be safe. For SYMC, the ratio of 0.98x suggests that interest is not strongly covered. Given the sheer size of Symantec, it’s unlikely to default on interest payments and enter bankruptcy. However, compared to an amply profitable large-cap peer, debtors may see more risk in lending to SYMC.

Next Steps:

SYMC’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. Though, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for SYMC’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Symantec to get a more holistic view of the stock by looking at:

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