An Examination of Aspen Technology’s Use of Debt on NASDAQ:AZPN: Is it Sensible?

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Summary:
1. Legendary fund manager Li Lu believes the biggest investment risk is not price volatility, but a permanent loss of capital. Use of debt can lead to risk, as it can become risky for a company when it cannot easily meet obligations, which could result in lenders taking control of the business.
2. Aspen Technology had $95.9 million of debt as of December 2023, up from $294.9 million a year earlier, but it also has $130.8 million in cash to offset that, meaning it has $34.9 million in net cash. The company had liabilities of US$372.0m due within 12 months and liabilities of US$1.01b due beyond 12 months.
3. Aspen Technology made an earnings before interest and tax (EBIT) loss over the trailing twelve months but generated positive free cash flow of $274m. The company has a huge market capitalization of $11.1 billion, so it’s worth keeping an eye on the strength of its balance sheet.

Source: Simply Wall St

For the full news article, please visit https://simplywall.st/stocks/us/software/nasdaq-azpn/aspen-technology/news/is-aspen-technology-nasdaqazpn-using-debt-sensibly/amp

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