Does Liberty Braves Group (NASDAQ: BATR.K) have a healthy balance sheet?



Howard Marks put it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about … and every investor practice that I know is worried. When we think about how risky a business is, we always like to look at its use of debt, because overloading debt can lead to bankruptcy. We can see that The Liberty Braves group (NASDAQ: BATR.K) uses debt in its business. But does this debt worry shareholders?

Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are ruthlessly liquidated by their bankers. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, constantly diluting shareholders, just to strengthen its balance sheet. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution of a business with the ability to reinvest at high rates of return. When we look at debt levels, we first look at cash and debt levels, together.

How much debt does the Liberty Braves group carry?

The graph below, which you can click for more details, shows that Liberty Braves Group had $ 718.0 million in debt as of September 2021; about the same as the previous year. On the other hand, it has $ 134.0 million in cash, resulting in net debt of around $ 584.0 million.

NasdaqGS: BATR.K History of debt to equity January 1, 2022

How healthy is the Liberty Braves group balance sheet?

We can see from the most recent balance sheet that Liberty Braves Group had liabilities of US $ 109.0 million due within one year and liabilities of US $ 1.22 billion due within one year. of the. In compensation for these obligations, he had cash of US $ 134.0 million as well as receivables valued at US $ 50.0 million within 12 months. It therefore has liabilities totaling US $ 1.14 billion more than its cash and short-term receivables combined.

This deficit is sizable compared to its market capitalization of US $ 1.48 billion, so he suggests shareholders keep an eye on Liberty Braves Group’s use of debt. This suggests that shareholders would be greatly diluted if the company needed to consolidate its balance sheet quickly. When analyzing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Liberty Braves Group’s ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free Analyst Profit Forecast report interesting.

Given that it has no significant operating income at the moment, shareholders are hopeful Liberty Braves Group can make progress and gain traction for the company, before it runs out of cash.

Emptor Warning

During the last twelve months Liberty Braves Group has recorded a loss of profit before interest and taxes (EBIT). Indeed, it lost US $ 14 million in EBIT. Considering that besides the liabilities mentioned above, we are not convinced that the company should use so much debt. Quite frankly, we think the record is far from up to par, although it could improve over time. Another reason to be cautious is that US $ 29 million of negative free cash flow has been bled in the past twelve months. Suffice it to say that we consider the action to be risky. When analyzing debt levels, the balance sheet is the obvious place to start. But at the end of the day, every business can contain risks that exist off the balance sheet. We have identified 2 warning signs with Liberty Braves Group, and understanding them should be part of your investment process.

At the end of the day, sometimes it’s easier to focus on businesses that don’t even need to go into debt. Readers can access a list of growth stocks with zero net debt 100% free, at present.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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