Rotten Tomato Stocks
No Result
View All Result
  • News
    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

  • NYSE
    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    DaVita Inc. stock falls Monday, still outperforms market

    DaVita Inc. stock falls Monday, still outperforms market

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

  • NASDAQ
    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Workhorse Group Inc. stock falls Monday, underperforms market

    Workhorse Group Inc. stock falls Monday, underperforms market

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

  • News
    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

  • NYSE
    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    DaVita Inc. stock falls Monday, still outperforms market

    DaVita Inc. stock falls Monday, still outperforms market

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

  • NASDAQ
    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Workhorse Group Inc. stock falls Monday, underperforms market

    Workhorse Group Inc. stock falls Monday, underperforms market

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

No Result
View All Result
Rotten Tomato Stocks
No Result
View All Result

These 4 Measures Indicate That Molina Healthcare (NYSE:MOH) Is Using Debt Reasonably Well

Editorial Staff by Editorial Staff
January 10, 2022
0
These 4 Measures Indicate That Molina Healthcare (NYSE:MOH) Is Using Debt Reasonably Well

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, ‘The possibility of permanent loss is the risk I worry about… and every practical investor I know worries about.’ 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. We note that Molina Healthcare, Inc. (NYSE:MOH) does have debt on its balance sheet. But is this debt a concern to shareholders?

Why Does Debt Bring Risk?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company’s debt levels is to consider its cash and debt together.

What Is Molina Healthcare’s Debt?

The image below, which you can click on for greater detail, shows that at September 2021 Molina Healthcare had debt of US$2.13b, up from US$1.81b in one year. But on the other hand it also has US$7.26b in cash, leading to a US$5.13b net cash position.

debt-equity-history-analysis
NYSE:MOH Debt to Equity History January 9th 2022

A Look At Molina Healthcare’s Liabilities

The latest balance sheet data shows that Molina Healthcare had liabilities of US$6.07b due within a year, and liabilities of US$2.45b falling due after that. On the other hand, it had cash of US$7.26b and US$1.91b worth of receivables due within a year. So it actually has US$654.0m more liquid assets than total liabilities.

This short term liquidity is a sign that Molina Healthcare could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Molina Healthcare has more cash than debt is arguably a good indication that it can manage its debt safely.

In fact Molina Healthcare’s saving grace is its low debt levels, because its EBIT has tanked 34% in the last twelve months. When it comes to paying off debt, falling earnings are no more useful than sugary sodas are for your health. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Molina Healthcare can strengthen its balance sheet over time.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Molina Healthcare may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Happily for any shareholders, Molina Healthcare actually produced more free cash flow than EBIT over the last three years. There’s nothing better than incoming cash when it comes to staying in your lenders’ good graces.

Summing up

While we empathize with investors who find debt concerning, you should keep in mind that Molina Healthcare has net cash of US$5.13b, as well as more liquid assets than liabilities. And it impressed us with free cash flow of US$2.7b, being 111% of its EBIT. So we are not troubled with Molina Healthcare’s debt use. There’s no doubt that we learn most about debt from the balance sheet. 

Related Posts

Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop
NYSE

Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

January 31, 2023
DaVita Inc. stock falls Monday, still outperforms market
NYSE

DaVita Inc. stock falls Monday, still outperforms market

January 31, 2023
Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade
NYSE

Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

January 31, 2023
AmEx Profits Fall 9% as Customers Fall Behind on Payments
NYSE

AmEx Profits Fall 9% as Customers Fall Behind on Payments

January 30, 2023
Load More
Next Post
Walmart beef sticks recalled for failure to label potential allergen

Walmart beef sticks recalled for failure to label potential allergen

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

POPULAR NEWS

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

April 14, 2021
CN Rail Stock Is So Undervalued That it’s Absurd

CN Rail Stock Is So Undervalued That it’s Absurd

May 2, 2021
US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

June 17, 2021
Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

September 14, 2021
10 Warning Signs That Should Tell You “This Stock is in Trouble”

10 Warning Signs That Should Tell You “This Stock is in Trouble”

November 11, 2019

EDITOR'S PICK

Caterpillar Inc. stock falls Friday, underperforms market

Caterpillar Inc. stock falls Friday, underperforms market

October 17, 2022
AstraZeneca PLC 3Q Loss/Shr $1.10

AstraZeneca PLC 3Q Loss/Shr $1.10

November 12, 2021
Citigroup Inc. stock falls Friday, underperforms market

Citigroup Inc. stock falls Friday, underperforms market

December 4, 2022
Inflation Hits Record High of 7.5% in Countries Using Euro

Inflation Hits Record High of 7.5% in Countries Using Euro

May 2, 2022

Stay Updated

Get breaking news delivered straight into your inbox

Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Rotten Tomato stocks is a wholly-owned subsidiary of Grainne Capital Limited.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Rotten Tomato Stocks cover the companies and markets that are declining, failing or headed for disaster. We help investors spot the down tends and recognize when something smells rotten.

RECENT POSTS

Stocks Sink as Markets Brace for Big Week With Fed, Earnings

Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

DaVita Inc. stock falls Monday, still outperforms market

POPULAR POSTS

Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

Workhorse Group Inc. stock falls Monday, underperforms market

© Copyright 2021 RottenTomatoStocks. All Rights Reserved 

Disclaimer | Privacy Policy

No Result
View All Result
  • HOME
  • NEWS
  • NYSE
  • NASDAQ
  • OTC
  • TSX

© 2021 RottenTomatoStocks.com

error: Content is protected !!
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.