17 Oct '15, 3am

Prioritizing Cash Holding to Debt in Evaluating Listed Stocks: When prospecting listed companies to buy, good…

When prospecting listed companies to buy, good companies might not always have a lot of cash. You cannot prioritize cash being higher in the decision to buy or not to buy. One of the gracious opinion provided by a reader to my brief prospecting of Transit Mixed Concrete is that the cash to debt ratio was not ideal. My inference is that high cash to debt is appealing. In some cases it is and personally, when I see a high net cash company relative to market capitalization (stock price x number of outstanding shares), it also intrigue me to take a second look. However I will perhaps show you by the end of this while this is a valued metric to consider, it usually isn’t something we should place high on the list of evaluation . Here are some of my thoughts. High Cash reduces the Return of Equity As a shareholder …

Full article: http://thefinance.sg/2015/10/17/prioritizing-cash-holding...

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