LONGi Green Energy Technology Co., Ltd. is a company that relies on debt like many others, but the key question is whether this debt makes the company risky. Debt becomes a problem when a company cannot easily pay off its creditors, potentially leading to bankruptcy or dilution of shareholder value. At the end of September 2024, LONGi Green Energy Technology had CN¥21.4b of debt, but also held CN¥51.1b in cash, resulting in a net cash position of CN¥29.8b. While the company has manageable liabilities when considering its market capitalization of CN¥138.7b, its recent financial performance, including losses in EBIT and revenue, raises concerns.
Although LONGi Green Energy Technology has notable liabilities, its net cash position suggests it does not have a heavy debt load. However, with an EBIT loss and negative free cashflow, the company may need to raise capital in the near future, pointing to potential risks. While the balance sheet is a starting point for analyzing debt levels, it is also important to consider other factors beyond financial statements. Investors should be aware of the risks associated with companies that are not generating profits and may require additional funding. This article by Simply Wall St provides general commentary and analysis based on historical data and analyst forecasts, not financial advice.
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