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Assets are the value of the company. Debt is "the money that needs to be held in the future".
In corporate analysis, it is important to balance not only how much asset you have, but how much debt you have.
In particular, it is important to see a company that controls資産abilities from a company with high assets.
This article organizes the differences between assets and abilities for beginners.
What is an asset?
Assets are valuable to the company.
For example:
| Examples of assets | 内容 |
|---|---|
| Cash | Company Money |
| Building | Factory |
| In Stock | Products |
| Shares | Investment Securities |
In other words, it is an asset that generates future money.
However, not all assets have the same value. There are some assets that can be cashed right away, and some assets that need to be cautious like stocks that are easy to sell.
What is debt?
Debt is the money you need to repay in the future.
The following are examples.
| Example of debt | 内容 |
|---|---|
| Payment | Debt from Bank |
| Corporate Bonds | Debt from investors |
| Payment | Payment |
Debt is likely to be bad, but it is necessary for corporate growth.
The important thing is that the amount of debt is not the amount itself, but the profit and cash as much as possible.
Why useのabilities?
Companies invest in growth with debt.
For example:
- Factory construction
- New store openings
- AI Investment
- Overseas
- Strengthening logistics facilities
If you don’t use any debt at all, your growth speed may be slower.
There is a good debt.
If you use the borrowed money for a profitable business and increase future profit, the debt will be a tool for growth.
What is dangerous debt?
The problem is a debt that cannot be repayment.
For example, in the following situations, the repayment burden is heavy.
- Reduce profit
- Interest rate rises
- Sales worsen
- Lack of cash
In particular, the deficit company, the lack of cash, and the borrowing dependency.
The meaning is very different because of whether you are investing in growth with debt or borrowing to fill the deficit.
It is not safe even if there is a lot of assets
It is thought that "safe if there is a lot of assets" is easy for beginners to misunderstand.
In fact, the contents of the asset are important.
| Contact | 実態 |
|---|---|
| Large inventory | Possibility of Sale |
| Real Estate | Maintenance and loss risk |
| More accounts | Possibility of recovery delay |
In other words, there are poor quality assets.
The important thing is whether the assets are made of cash.
Even in the same asset, the evaluation differs from the factory that generates profits and the stocks sold.
What is Net Asset?
Net assets are資産abilities from assets.
The calculation formula is:
Net assets = assets - abilitiesThis is a way of thinking close to the company’s true holding.
Even if the assets are large, the net assets will be small if the debt is large.
3 things to see in investment
Capital ratio
ity ratio is an indicator to see the company’s safety.
The calculation formula is:
ity ratio(%) = Net assets ÷ Total assets × 100The following is a general guide.
| Standard | Image |
|---|---|
| 50% or more | Safety |
| Around 30% | Standard |
| Less than 20% | Note |
However, there is a difference in the industry.
In the industry that uses銀行abilities like banks, real estates, and electricity, simple comparison is required.
Cash Ratio
Cash may be more important than profit.
However, it is because if the bankruptcy is worse even in black letters.
Companies with high cash will be able to continue investing in situations and respond to borrowings.
In particular, in the recession section, how much cash has become the company's endurance.
Interest-bearing debt
Interest-bearing debt is a debt of interest.
Bank loans and corporate bonds.
In terms of interest rate rise, companies with heavy interest-bearing debts are noted.
Because when the pay interest increases, the final profit may be overwhelmed even if the operating profit increases.
How Beginners Should Remember
The first thing you want to remember is that it is not a borrowing equal.
What is important is that you can increase your profit by borrowing.
For example, if you can make a factory by borrowing and increase high profit products, it will be a plus.
Conversely, it is dangerous if the borrower is increasing due to deficit compensation.
Investors should see the size of abilities as well as the usage and repayment of abilities.
- The value of the company
- Debt is the future of money
- Good debt is used for growth
- Cash output is important
- Safety also confirms capital ratio
In corporate analysis, if you look at the power of managing debt as well as the size of the asset, the essence becomes more visible.