But it's clear that we should definitely closely examine whether it can manage its debt without dilution. Great Lakes Dredge & Dock has a market capitalization of US$952.0m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. So its liabilities total US$338.5m more than the combination of its cash and short-term receivables. Offsetting this, it had US$180.8m in cash and US$70.3m in receivables that were due within 12 months.
We can see from the most recent balance sheet that Great Lakes Dredge & Dock had liabilities of US$160.2m falling due within a year, and liabilities of US$429.4m due beyond that. NasdaqGS:GLDD Debt to Equity History October 17th 2021 How Healthy Is Great Lakes Dredge & Dock's Balance Sheet? However, because it has a cash reserve of US$180.8m, its net debt is less, at about US$139.9m. The chart below, which you can click on for greater detail, shows that Great Lakes Dredge & Dock had US$320.7m in debt in June 2021 about the same as the year before. What Is Great Lakes Dredge & Dock's Debt? The first step when considering a company's debt levels is to consider its cash and debt together. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet.
Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. But the more important question is: how much risk is that debt creating? What Risk Does Debt Bring?ĭebt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. As with many other companies Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) makes use of debt. and every practical investor I know worries about.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about.
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