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Is Micronet Enertec Technologies Inc’s (NASDAQ:MICT) Balance Sheet A Threat To Its Future?

Investors are always looking for growth in small-cap stocks like Micronet Enertec Technologies Inc (NASDAQ:MICT), with a market cap of US$11.98M. However, an important fact which most ignore is: how financially healthy is the business? Since MICT is loss-making right now, it’s essential to evaluate the current state of its operations and pathway to profitability. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. However, since I only look at basic financial figures, I recommend you dig deeper yourself into MICT here.

How does MICT’s operating cash flow stack up against its debt?

MICT’s debt levels have fallen from US$7.41M to US$5.17M over the last 12 months – this includes both the current and long-term debt. With this debt payback, the current cash and short-term investment levels stands at US$2.11M , ready to deploy into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. For this article’s sake, I won’t be looking at this today, but you can assess some of MICT’s operating efficiency ratios such as ROA here.

Does MICT’s liquid assets cover its short-term commitments?

Looking at MICT’s most recent US$22.25M liabilities, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.14x. Usually, for Aerospace & Defense companies, this is a suitable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.

NasdaqCM:MICT Historical Debt Jun 4th 18
NasdaqCM:MICT Historical Debt Jun 4th 18

Does MICT face the risk of succumbing to its debt-load?

Since total debt levels have outpaced equities, MICT is a highly leveraged company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. However, since MICT is currently unprofitable, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.

Next Steps:

MICT’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven’t considered other factors such as how MICT has been performing in the past. I recommend you continue to research Micronet Enertec Technologies to get a better picture of the stock by looking at:

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  1. Valuation: What is MICT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MICT is currently mispriced by the market.

  2. Historical Performance: What has MICT’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.