In the last year Allegheny Technologies had a loss before interest and tax, and actually shrunk its revenue by 32%, to US$2.6b.
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So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting. But ultimately the future profitability of the business will decide if Allegheny Technologies can strengthen its balance sheet over time. There's no doubt that we learn most about debt from the balance sheet. Hypothetically, extremely heavy dilution would be required if the company were forced to pay down its liabilities by raising capital at the current share price. When you consider that this deficiency exceeds the company's US$1.93b market capitalization, you might well be inclined to review the balance sheet intently. So it has liabilities totalling US$2.48b more than its cash and near-term receivables, combined. Offsetting this, it had US$472.5m in cash and US$414.5m in receivables that were due within 12 months. We can see from the most recent balance sheet that Allegheny Technologies had liabilities of US$599.1m falling due within a year, and liabilities of US$2.77b due beyond that. NYSE:ATI Debt to Equity History October 26th 2021 How Healthy Is Allegheny Technologies' Balance Sheet? However, because it has a cash reserve of US$472.5m, its net debt is less, at about US$1.10b. The chart below, which you can click on for greater detail, shows that Allegheny Technologies had US$1.57b in debt in June 2021 about the same as the year before. How Much Debt Does Allegheny Technologies Carry? When we examine debt levels, we first consider both cash and debt levels, together. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. If things get really bad, the lenders can take control of the business. But the more important question is: how much risk is that debt creating? When Is Debt A Problem?ĭebt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. As with many other companies Allegheny Technologies Incorporated (NYSE:ATI) makes use of debt. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. David Iben put it well when he said, 'Volatility is not a risk we care about.
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