Current Portion of Long Term Debt and Capital Leases

Current Port. of LT Debt/Capital Leases is Long Term Debt due within a year. The value of Current Port. of LT Debt/Capital Leases should be much less than Cash & Equivalents. To determine the company's financial health, add Current Port. of LT Debt/Capital Leases to Notes Payable/Short Term Debt and check if it is less than  Cash and Short Term Investments.

A company that has lots of cash and very little or no debt will easily survive a recession. If the company has a Durable Competitive Advantage, too much Long Term Debt due will scare investors and drive the company's stock price lower making it a potential take over. But, if the company does not have  a Durable Competitive Advantage, too much Long Term Debt that is due can drive that company into bankruptcy.

 

Equations

 

Check if Current Port. of LT Debt is much less than Cash & Equivalents:

Current Portion of Long Term Debt and Capital Leases

 

Check the company's financial health:

Current Portion of Long Term Debt and Capital Leases use it to check financial health

 

Check if the company will survive a recession:

 

If the company's financial health is not good, meaning the company has more debt due than cash, these are the potential outcomes:

Does the company have a Durable Competitive Advantage?

Potential Outcome

Yes Take Over Target
No Bankruptcy

 

My Financial Analysis of Stocks

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  • Buying the Dip in ViacomCBS (VIAC) and Sold Pfizer (PFE) A very big opportunity came today to buy ViacomCBS (VIAC) at a ridiculously low price. Unfortunately we had to sell Pfizer (PFE). Pfizer has been a big disappointment for us ...
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