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Are Trinity Place Holdings Inc’s (TPHS) Interest Costs Too High?

Shawn Clark

Trinity Place Holdings Inc (AMEX:TPHS) is a small-cap stock with a market capitalization of USD $224.52M. 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. There are always disruptions which destabilize an existing industry, in which most small-cap companies are the first casualties. These factors make a basic understanding of a company’s financial position of utmost importance for a potential investor. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Check out our latest analysis for Trinity Place Holdings

Does TPHS generate enough cash through operations?

AMEX:TPHS Historical Debt Oct 31st 17
AMEX:TPHS Historical Debt Oct 31st 17

There are many headwinds that come unannounced, such as natural disasters and political turmoil, which can challenge a small business and its ability to adapt and recover. These adverse events bring devastation and yet does not absolve the company from its debt. Fortunately, we can test the company’s capacity to pay back its debtholders without summoning any catastrophes by looking at how much cash it generates from its current operations. In the case of TPHS, operating cash flow turned out to be -0.14x its debt level over the past twelve months. This means what TPHS can generate on an annual basis, which is currently a negative value, does not cover what it actually owes its debtors in the near term. This raises a red flag, looking at TPHS’s operations at this point in time.

Can TPHS meet its short-term obligations with the cash in hand?

What about its other commitments such as payments to suppliers and salaries to its employees? As cash flow from operation is hindered by adverse events, TPHS may need to liquidate its short-term assets to meet these upcoming payments. We test for TPHS’s ability to meet these needs by comparing its cash and short-term investments with current liabilities. Our analysis shows that TPHS does have enough liquid assets on hand to meet its upcoming liabilities, which lowers our concerns should adverse events arise.

Can TPHS service its debt comfortably?

A substantially higher debt poses a significant threat to a company’s profitability during a downturn. In the case of TPHS, the debt-to-equity ratio is 74.26%, which means, while the company’s debt could pose a problem for its earnings stability, it is not at an alarmingly high level yet.

Next Steps:

Are you a shareholder? TPHS’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. Given that its financial position may be different. You should always be keeping abreast of market expectations for TPHS’s future growth on our free analysis platform.

Are you a potential investor? Although short-term liquidity isn’t a concern, TPHS’s large debt ratio along with low cash coverage of debt may scare some investors away intially. Though, keep in mind that this is a point-in-time analysis, and today’s performance may not be representative of TPHS’s track record. I encourage you to continue your research by taking a look at TPHS’s past performance analysis on our free platform to conclude on TPHS’s financial health.


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.