Kriti PatelTLDR:
- Micron Technology (NASDAQ:MU) has a fair amount of debt, but it currently has enough cash to offset the debt.
- The company’s balance sheet shows it has liabilities outweighing its cash and receivables, but given its market capitalization, these liabilities do not pose a significant threat.
- Micron Technology has seen a decrease in revenue and negative earnings before interest and tax (EBIT), which raises concerns about its use of debt.
Micron Technology, Inc. (NASDAQ:MU) has a fair amount of debt, but it currently has enough cash to offset the debt, according to an analysis by Simply Wall St. Debt can be a risky factor for a company, as too much debt can sink a company if it is unable to pay off its lenders. However, Micron Technology’s balance sheet shows that it has enough cash to cover its debt, which suggests that it is managing its debt reasonably well.
The analysis reveals that as of November 2023, Micron Technology had a total debt of US$12.0 billion, up from US$9.35 billion in the previous year. However, the company also had cash amounting to US$9.05 billion, resulting in a net debt of approximately US$2.98 billion.
While Micron Technology’s balance sheet shows that it has liabilities outweighing its cash and receivables, this is not particularly concerning considering its market capitalization of US$98.5 billion. However, it is still important to continually monitor the company’s balance sheet for any changes.
In terms of profitability, Micron Technology has experienced a loss at the EBIT level over the past 12 months, with its revenue dropping by 41%. These factors, alongside its liabilities, raise concerns about the company’s use of debt. Additionally, the company has had negative free cash flow of US$5.0 billion over the last year, further adding to the risk.
Overall, while Micron Technology currently has enough cash to offset its debt, its declining revenue and negative EBIT suggest that the company may not be in the best position to take on additional debt. It’s important for investors to carefully consider the risks associated with the company’s debt levels before making any investment decisions.
