According to Morningstar, the cannabis behemoth Canopy Growth Corp manages debt exceptionally well. To prove this, they currently have a 0.01 debt/equity ratio. The lower the number the better. To put things in perspective, Warren Buffett looks for a 0.5 or lower debt/ratio when looking at companies. This is one of his most important figures when looking at the financial health of a company for a long term investment. Canopy’s 0.01 number is one of the strongest in the sector.
Taking a deeper dive into the company’s financial health, Canopy has had a history of incredibly low debt/equity ratios. In 2014 they hit 0.07, their highest on record and have maintained a 0.01 for all of 2017.
They have also managed to keep their liabilities and long term debt low with a current ratio of 10.5. The current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) relative to that company’s current total liabilities. The higher the ratio, the stronger the outlook for success of the company.
Canopy continues to have very strong financials as the company has seen an incredible amount of growth. Their stock has had a historic couple of weeks, constantly hitting new all time highs. Watch for Canopy to continue its growth while maintaining a healthy balance sheet.
Full financial report: http://financials.morningstar.com/ratios/r.html?t=WEED®ion=can&culture=en-US
Canopy Growth Corp: https://www.canopygrowth.com/