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            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

            Scientists gain insights into Old Master artists' use of egg in oil … – The Guardian

            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

            Virtual Reality in nursing education goes mainstream – Wolters Kluwer

            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

            France braces for anti-pension reform protests amid rising violence on the streets – CNN

            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

            Packers puzzled as talks with QB Rodgers 'never transpired' – ESPN

            Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

              You Were Missed! Just Cooking BBQ And More Is Moving To Killeen … – ktemnews.com

              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

              Columbia County Health and Wellness Expo – WJBF-TV

              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

              20 Ways To Use Textured Vegetable Protein In Your Cooking – Tasting Table

              Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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                City of Fort Dodge prepares to borrow $14.5 million – Fort Dodge Messenger

                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                Jurupa Hills TV production students are honored at SBVC Film Festival – Fontana Herald-News

                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                Vote for the first Player of the Week of the spring sports season – Delmarva Now

                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                'Succession' Season 4 Release Schedule – When Do New Episodes Drop? – Men's Health

                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                Fantasy Baseball Rankings 2023: Breakouts, sleepers, busts by computer model that predicted Votto's struggles – CBS Sports

                Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Forum Energy Technologies Awarded Approximately $25 Million Contract to Provide Desalter Systems to Saudi Aramco – Yahoo Finance

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Toledo Technology students get early look at engineering careers – Toledo Blade

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Technology has become the double-edged sword of Asia's protests – BBC

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Panera Bread will use palm-scanning technology for its loyalty program – WLTX.com

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Hong Kong entering a 'golden era' of I&T, with major career opportunities – South China Morning Post

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

                  Cowbell opens new technology center in Pune, India – Reinsurance News

                  Biden State of the Union address likely boosted Democrats' 2024 confidence – NPR

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                  Is Marvell Technology (NASDAQ:MRVL) Using Too Much Debt?

                  by Editor
                  June 12, 2021
                  in Tech
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                  Is Marvell Technology (NASDAQ:MRVL) Using Too Much Debt?
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                  Warren Buffett famously said, ‘Volatility is far from synonymous with risk.’ So it seems the smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess how risky a company is. We can see that Marvell Technology, Inc. (NASDAQ:MRVL) does use debt in its business. But should shareholders be worried about its use of debt?

                  Why Does Debt Bring Risk?

                  Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

                  Check out our latest analysis for Marvell Technology

                  What Is Marvell Technology’s Net Debt?

                  You can click the graphic below for the historical numbers, but it shows that as of May 2021 Marvell Technology had US$4.90b of debt, an increase on US$1.44b, over one year. On the flip side, it has US$572.6m in cash leading to net debt of about US$4.33b.

                  debt-equity-history-analysis
                  NasdaqGS:MRVL Debt to Equity History June 12th 2021

                  How Strong Is Marvell Technology’s Balance Sheet?

                  We can see from the most recent balance sheet that Marvell Technology had liabilities of US$1.16b falling due within a year, and liabilities of US$5.21b due beyond that. Offsetting this, it had US$572.6m in cash and US$694.4m in receivables that were due within 12 months. So it has liabilities totalling US$5.11b more than its cash and near-term receivables, combined.

                  Given Marvell Technology has a humongous market capitalization of US$42.7b, it’s hard to believe these liabilities pose much threat. Having said that, it’s clear that we should continue to monitor its balance sheet, lest it change for the worse.

                  We measure a company’s debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

                  Marvell Technology shareholders face the double whammy of a high net debt to EBITDA ratio (5.9), and fairly weak interest coverage, since EBIT is just 0.82 times the interest expense. The debt burden here is substantial. However, the silver lining was that Marvell Technology achieved a positive EBIT of US$70m in the last twelve months, an improvement on the prior year’s loss. There’s no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Marvell Technology can strengthen its balance sheet over time. So if you’re focused on the future you can check out this free report showing analyst profit forecasts.

                  Finally, a company can only pay off debt with cold hard cash, not accounting profits. So it’s worth checking how much of the earnings before interest and tax (EBIT) is backed by free cash flow. Happily for any shareholders, Marvell Technology actually produced more free cash flow than EBIT over the last year. There’s nothing better than incoming cash when it comes to staying in your lenders’ good graces.

                  Our View

                  We weren’t impressed with Marvell Technology’s net debt to EBITDA, and its interest cover made us cautious. But like a ballerina ending on a perfect pirouette, it has not trouble converting EBIT to free cash flow. When we consider all the factors mentioned above, we do feel a bit cautious about Marvell Technology’s use of debt. While we appreciate debt can enhance returns on equity, we’d suggest that shareholders keep close watch on its debt levels, lest they increase. There’s no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we’ve identified 1 warning sign for Marvell Technology that you should be aware of.

                  If you’re interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

                  Promoted
                  If you’re looking to trade Marvell Technology, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.

                  This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
                  *Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

                  Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.



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