Does Coffee Holding Co Incs JVA Low DebtLoad Make It Financially Strong Simply Wall St

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“Companies with small market capitalization such as Coffee Holding Co Inc (NASDAQ:JVA), while they can deliver high growth, financial strength is the deciding element in their long-term existence. A low debt-loadu2014debt-to-equity ratio of 27.9% may have investors believing that the company is financially strong. However, financial strength also depends on how operating cash flows and earnings stack up against debt.
Primarily due to the lack of diversification in revenues geographically, often investors opt for a bundle of small-caps. While savvy investors arenu2019t wrong in looking for singular blockbuster opportunities and trying to achieve diversification on their own by allocating a small part of their portfolio capital to small-caps, that doesnu2019t make these investments less risky individually. However, to help you reduce that risk, Iu2019m going to provide you with few basic aspects other than debt-to-equity ratio to gauge a ballpark estimate on how financially strong is the company. Check out our latest analysis for Coffee Holding
How Coffee Holdingu2019s liquid assets stack up against its debt?
To test Coffee Holdingu2019s financial condition further, I would weigh its current assets against the total debt. The level of current assets indicates JVAu2019s ability to survive a downturn, which most companies face several times in their life cycle. JVAu2019s current assets ($33M) easily cover the total debt ($7M), giving it enough control on its balance sheet to survive a downturn.”

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