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Mid-caps stocks, like Ionis Pharmaceuticals Inc (NASDAQ:IONS) with a market capitalization of US$5.85B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, generally ignored mid-caps have historically delivered better risk adjusted returns than both of those groups. IONS’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into IONS here. View our latest analysis for Ionis Pharmaceuticals
Does IONS generate an acceptable amount of cash through operations?
IONS has sustained its debt level by about US$607.48M over the last 12 months comprising of short- and long-term debt. At this current level of debt, IONS’s cash and short-term investments stands at US$1.02B , ready to deploy into the business. Additionally, IONS has produced US$174.15M in operating cash flow over the same time period, resulting in an operating cash to total debt ratio of 28.67%, indicating that IONS’s operating cash is sufficient to cover its debt. This ratio can also be interpreted as a measure of efficiency for unprofitable companies since metrics such as return on asset (ROA) requires positive earnings. In IONS’s case, it is able to generate 0.29x cash from its debt capital.
Can IONS pay its short-term liabilities?
Looking at IONS’s most recent US$224.74M liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 5.2x. Though, anything above 3x is considered high and could mean that IONS has too much idle capital in low-earning investments.
Can IONS service its debt comfortably?
IONS is a highly-leveraged company with debt exceeding equity by over 100%. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. Though, since IONS is currently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
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IONS’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. Since there is also no concerns around IONS’s liquidity needs, this may be its optimal capital structure for the time being. I admit this is a fairly basic analysis for IONS’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Ionis Pharmaceuticals to get a better picture of the mid-cap by looking at: