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The Nitty Gritty of A Healthcare Stock's Balance Sheet

so buckle up listeners we are digging

into some pretty nitty-gritty financials

today specifically we want to talk about

the balance sheet in my mind you can

split drug developers into two

categories those that are a little bit

more established and those that are not

as much so our conversation today is

really going to focus more on some of

the more established companies but that

means that a lot of what we're covering

today is applicable across all of Big

Pharma and pretty much any company with

it a good established portfolio of drugs

that has money coming in as opposed to

some these tiny biotechs that we talked

about where when you look at them you

really want to focus on things like cash

burn so that that's a whole different

story so before we get into any company

specifics what exactly is a balance

sheet a balance sheet you know first of

all let me start by saying that most

investors tend to focus on the sexier

numbers revenue growth EPS growth and

the balance sheet sometimes gets

forgotten okay what I think it's very

important though when investors are

concerned health care companies to

consider the balance sheet as a very

easy to look at simple to use tool for

figuring out is the company financially

healthy because in any given quarter you

can put up you know solid revenue growth

or solid EPS growth and you know that

doesn't necessarily mean that the

company is going to be able to pay its

bills over the long haul so what the

balance sheet does is it shows you how

much a company has in assets it shows

you how much a company owes and then it

shows you how much equity shareholders

have in that company so essentially what

you have is you have three different

pieces of the puzzle you have assets and

assets will always equal liabilities

plus equity okay but the thing the big

takeaway here is that assets are things

like cash property plant equipment

things that you know can be liquidated

liabilities are things that people of

like long-term debt borrowings those

type of things yeah and the other good

thing that's included on the balance

sheet is the distinction between

short-term and long-term for a lot of

these items so you

really get a picture of do does this

company Oh a lot of money in the next

year or does it have a lot of long-term

liabilities and same thing with assets

as well meanwhile you can find these

companies balance sheets on the SEC

edgar website which a quick Google

search will get you to from there just

to find the 10 KS 10-q filings and you

can find the balance sheets in them