OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Credit Tracker By Industry Sector
Credit Tracker By Sector
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Week ended 09/20/2024
Weekly Sector Credit – Biotech/Pharma: Liquidity stress, negative cash flow, and small firm size suggest high credit risk that is mitigated by solid asset value protection, which exceeds the median levels for all other sectors of the cannabis industry.
- The free cash flow adjusted current ratio median of .25x suggests that over half of the 38 companies that the measure was calculated on lack sufficient liquid assets to discharge their current liabilities without additional financing.
- The annualized funds from operation to total liabilities 3red quartile measure of -.13x indicates that more than 75% of the companies in the sector have negative after-tax cash flow.
- The median size of companies in the sector is only $14M, suggesting that most do not have significant ancillary assets to sell to augment liquidity.
- Against this, the total Liabilities to market cap median of 0.26x suggests (with some minor algebraic manipulation) that the market views the median company’s asset value to be approximately 4.8x its liabilities, giving substantial asset value protection.
- The sector has obvious credit weaknesses, but they are substantially mitigated by strong asset value coverage.
Week ended 09/20/2024
Weekly Sector Credit – Biotech/Pharma: Liquidity stress, negative cash flow, and small firm size suggest high credit risk that is mitigated by solid asset value protection, which exceeds the median levels for all other sectors of the cannabis industry.
- The free cash flow adjusted current ratio median of .25x suggests that over half of the 38 companies that the measure was calculated on lack sufficient liquid assets to discharge their current liabilities without additional financing.
- The annualized funds from operation to total liabilities 3red quartile measure of -.13x indicates that more than 75% of the companies in the sector have negative after-tax cash flow.
- The median size of companies in the sector is only $14M, suggesting that most do not have significant ancillary assets to sell to augment liquidity.
- Against this, the total Liabilities to market cap median of 0.26x suggests (with some minor algebraic manipulation) that the market views the median company’s asset value to be approximately 4.8x its liabilities, giving substantial asset value protection.
- The sector has obvious credit weaknesses, but they are substantially mitigated by strong asset value coverage.
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