jameswilliamss

Location: United States of America
Flowers: 0, Eggs: 0

Comments

F5 Networks (NASDAQ:FFIV) Seems To Use Debt Quite Sensibly

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. Importantly, F5 Networks, Inc. (NASDAQ:FFIV) does carry debt. But should shareholders be worried about its use of debt?

When Is Debt A Problem?
Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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. When we think about a company's use of debt, we first look at cash and debt together.

View our latest analysis for F5 Networks

What Is F5 Networks's Net Debt?
You can click the graphic below for the historical numbers, but it shows that as of September 2020 F5 Networks had US$388.3m of debt, an increase on none, over one year. However, its balance sheet shows it holds US$1.21b in cash, so it actually has US$821.6m net cash.

debt-equity-history-analysis
debt-equity-history-analysis
How Strong Is F5 Networks's Balance Sheet?
The latest balance sheet data shows that F5 Networks had liabilities of US$1.29b due within a year, and liabilities of US$1.16b falling due after that. On the other hand, it had cash of US$1.21b and US$434.3m worth of receivables due within a year. So its liabilities total US$801.5m more than the combination of its cash and short-term receivables.

Since publicly traded F5 Networks shares are worth a very impressive total of US$10.7b, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, F5 Networks also has more cash than debt, so we're pretty confident it can manage its debt safely.

For more information about: f5 certification
2021-04-21 01:43:08, views: 186, Comments: 0
   
0
0
`
zebratrade