Voxeljet AG (NYSE:VJET) is a small-cap stock with a market capitalization of US$68.82M. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that VJET is not presently profitable, it’s essential to understand the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Nevertheless, this commentary is still very high-level, so I suggest you dig deeper yourself into VJET here.

Does VJET generate enough cash through operations?

VJET has built up its total debt levels in the last twelve months, from €2.44M to €6.11M , which is made up of current and long term debt. With this increase in debt, the current cash and short-term investment levels stands at €19.51M for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of VJET’s operating efficiency ratios such as ROA here.

Can VJET pay its short-term liabilities?

At the current liabilities level of €5.52M liabilities, it seems that the business has been able to meet these commitments with a current assets level of €37.51M, leading to a 6.8x current account ratio. Though, a ratio greater than 3x may be considered as too high, as VJET could be holding too much capital in a low-return investment environment.

Is VJET’s debt level acceptable?

With debt at 17.21% of equity, VJET may be thought of as appropriately levered. This range is considered safe as VJET is not taking on too much debt obligation, which may be constraining for future growth. VJET’s risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.

Next Steps:

VJET’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven’t considered other factors such as how VJET has been performing in the past. I recommend you continue to research Voxeljet to get a better picture of the stock by looking at: