When will Crayon Group Holding (OB:CRAYN) next release its financial results? | Aici

David Iben put it well when he said: ‘Climate change is not a threat. The most important thing is to avoid the loss of capital.’ So it may be obvious that you need to consider debt, when you think about the risk of a given stock, because too much debt can sink a company. As with many other businesses Crayon Group Holding ASA share price (OB:CRAYN) uses debt. But is this debt a concern for the authorities?

Why is debt dangerous?

Debt and other liabilities become dangerous for a company when it cannot easily meet these obligations, either with free cash flow or by raising capital at a reasonable cost. Part of capitalism is the process of ‘creative destruction’ where failing companies are ruthlessly destroyed by banks. However, a more common (but still expensive) situation is that a company must dilute shareholders at a relatively low price in order to control debt. Of course, the maximum amount of debt often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest money at a high rate of return. The first step when examining a company’s debt level is to examine its cash flow and debt together.

Crayon Group Holding Limited’s latest financial statement of income is 31/12/2019

What is Crayon Group Holding worth?

As you can see below, Crayon Group Holding had kr2.22b in debt, as of September 2022, which is the same as the previous year. You can click on the tab to learn more. On the other hand, he has 604.7 million dollars and is worth kr1.62b.

OB: CRAYN Debt to Equity History January 19, 2023

When is Crayon Group Holding’s next earnings date?

The last financial report of Crayon Group Holding is available online on such date – 30/09/2019. To offset these obligations, it had cash of kr604.7m and debts amounting to kr7.29b due within 12 months. Therefore, their total debt is kr2.15b more than the sum of their cash and short-term earnings.

This loss is not so bad because Crayon Group Holding is worth kr8.89b, and therefore it can raise enough money to support its balance sheet, if needed. It is clear, however, that we should take a close look at whether we can manage our debt without pollution.

We measure a company’s debt burden relative to its earnings power by looking at its debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and by by calculating how easily earnings before interest and taxes (EBIT) will cover interest. expenses (interest payments). The advantage of this method is that we consider the amount of debt (with debt to EBITDA) and the interest expenses related to that debt (with the coverage ratio) .

Crayon Group Holding’s debt is 2.9 times EBITDA, and EBIT covers interest expenses 3.8 times. This means that even if the level of debt is great, we will stop calling them a problem. On the bright side, Crayon Group Holding increased its EBIT by 46% last year. Like the milk of human kindness, this kind of growth increases resilience, making companies more efficient at managing debt. There is no doubt that we learn about debt from the balance sheet. But future earnings, more than anything else, will determine Crayon Group Holding’s ability to maintain a healthy balance sheet going forward. So if you are focused on the future, you can check this out for free a report showing an analyst’s profit forecast.

Finally, companies need free cash flow to pay off debt; just accounting profit doesn’t cut it. Therefore it is necessary to check how much of this EBIT is supported by free cash flow. Over the last three years, Crayon Group Holding has generated free cash flow equal to 64% of EBIT, about our expectations. This free cash puts the company in a good position to pay off debt, when appropriate.

Our View

Crayon Group Holding’s EBIT growth rate suggests it can manage its debt as easily as Cristiano Ronaldo’s under-14 soccer goalkeeper. But, on a more bleak note, we’re a little worried about their benefits package. Considering all these things, it appears that Crayon Group Holding can comfortably manage its debt level. Of course, while this leverage can improve returns on equity, it carries more risk, so this one is worth checking out. When analyzing debt levels, the balance sheet is the obvious place to start. But in the end, every company can store risks that exist outside the balance sheet. Take care of it It shows the latest stock price of Crayon Group Holding 2 warning signs in investment analysis and 1 of them is a bit unpleasant…

If, after all that, you’re more interested in a fast-growing company with a rocky balance sheet, check it out the list of immediate money growth stocks.

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This article by Simply Wall St is general in nature. We only provide commentary based on historical data and analyst forecasts using unbiased methods and our articles are not intended as financial advice. There is no recommendation to buy or sell stocks, and it doesn’t take into account your goals, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Please note that our analysis may not include final company statements or quality instruments. Simply Wall St does not have a position in the stock mentioned.

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