My criteria.
1. Total Assets/Total Equity > 3 times
This means the company is probably borrowing a lot unless they are sitting on cash.
2. Cash and Near Cash < ST Borrowings & Liabilities Excluding Trade Payables
3. EBITDA/Interest Expense Ratio of < 5
This means at least 20% of their income goes to interest expense.
Arriving at the list, I decided to filter out the companies with smaller and unmeaningful market caps. Names such as Junma, China ......I tried to do an exercise on our locally listed companies and filtering out those that are over reliant on short term borrowings which could pose a problem to refinance in case of a market shock.
It is not the most accurate thing to do given we are 3/4th into the year and most of the numbers are dated, using end 2013 accounts. But it was the only reference point I had.
My criteria.
1. Total Assets/Total Equity > 3 times
This means the company is probably borrowing a lot unless they are sitting on cash.
2. Cash and Near Cash < ST Borrowings & Liabilities Excluding Trade Payables
3. EBITDA/Interest Expense Ratio of < 5
This means at least 20% of their income goes to interest expense.
Arriving at the list, I decided to filter out the companies with smaller and unmeaningful market caps. Names such as Junma, China ......
My criteria.
1. Total Assets/Total Equity > 3 times
This means the company is probably borrowing a lot unless they are sitting on cash.
2. Cash and Near Cash < ST Borrowings & Liabilities Excluding Trade Payables
3. EBITDA/Interest Expense Ratio of < 5
This means at least 20% of their income goes to interest expense.
Arriving at the list, I decided to filter out the companies with smaller and unmeaningful market caps. Names such as Junma, China ......
