Is Navios Maritime Acquisition (NYSE:NNA) Using Too Much Debt? – Simply Wall St News
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that ‘Volatility is far from synonymous with risk. When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, Navios Maritime Acquisition Corporation (NYSE:NNA) does carry debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company’s debt levels is to consider its cash and debt together.
Check out our latest analysis for Navios Maritime Acquisition
What Is Navios Maritime Acquisition’s Debt?
You can click the graphic below for the historical numbers, but it shows that as of September 2019 Navios Maritime Acquisition had US$1.16b of debt, an increase on US$1.02b, over one year. However, because it has a cash reserve of US$102.9m, its net debt is less, at about US$1.05b.