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<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The size of Stryker Corporation (NYSE: SYK), a large-cap company of $ 68 billion, often attracts investors looking for a reliable investment in the stock market. Risk-conscious market participants tend to look for large companies, attracted by the prospect of varied sources of income and high return on capital. But the key to extending the previous successes lies in the health of the company's finances. I will give you an overview of Stryker's financial liquidity and indebtedness to give you an idea of ​​Stryker's position to take advantage of potential acquisitions or to easily withstand future recessions. Note that this information is entirely focused on financial health and is a high-level overview. I encourage you to look further. in SYK here. "data-reactid =" 28 "> The size of Stryker Corporation (NYSE: SYK), a large-cap company of 68 billion US dollars, often attracts investors looking for a safe investment in the stock market. Risk-conscious market participants tend to seek out large companies, attracted by the prospect of varied sources of income and high returns on capital, but the key to extending past successes lies in the health of financial statements. I will provide an overview of Stryker's financial liquidity and leverage to give you an idea of ​​Stryker's position to take advantage of potential acquisitions or to easily withstand future crises. The information is fully focused on financial health and provides a high-level overview, so I encourage you to deepen your thoughts on SYK.

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How much money does SYK generate through its operations?

Over the past year, SYK has increased its debt from $ 7.2 billion to $ 9.9 billion, which includes long-term debt. With this growth in debt, SYK's cash and short-term investments amount to $ 3.7 billion, ready to be deployed in the company. In addition, SYK generated $ 2.6 billion in operating cash flow over the same period, resulting in a total cash operating ratio to total debt of 26%, indicating that SYK debt is adequately covered by operating cash flow. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In the case of SYK, it is able to generate 0.26 times the liquidity of its debt capital.

Do SYK's liquid assets cover short-term liabilities?

In reviewing SYK's $ 4.8 billion short-term liabilities, the Company maintained a safe level of current assets to meet its obligations, the latest ratio being 2.02. For medical equipment companies, this ratio is within a reasonable range because it has sufficient cash reserves without leaving too much inactive capital or low-paying investments.

NYSE: Historic Debt of SYK February 11 19

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Does SYK run the risk of succumbing to its debt?

With a debt ratio of 84%, SYK can be considered as a leveraged company above average. This is not unusual for large caps because debt tends to be less expensive than equity because interest payments are tax deductible. As a result, the cost of capital for large firms is often lower because of the ease of obtaining financing, which is an advantage over small businesses. We can verify whether SYK's debt levels are sustainable by comparing interest paid to corporate profits. A business generating a profit after interest and taxes at least equal to three times its net interest payments is considered financially sound. In the case of SYK, the ratio of 21.34x suggests that the interest is easily covered. High interest coverage serves as an indicator of a company's safety, which shows why many large organizations such as SYK are considered a risk-averse investment.

Next steps:

Although SYK's debt is in the upper end of the spectrum, its cash flow appears adequate to meet its obligations, meaning that its debt is used effectively. This can mean that it is an optimal capital structure for the company, since it also respects its short-term commitments. Keep in mind that I have not taken into account other factors such as the performance of SYK in the past. I recommend that you continue your research on Stryker for a more holistic view of big capitalization by examining:

  1. Future prospects: What do well-informed industry analysts predict for SYK's future growth? Check out our free research report on analyst consensus on SYK's outlook.
  2. Evaluation: What is SYK worth today? Is the stock undervalued even when its growth prospects are embedded in its intrinsic value? The intrinsic value infographic of our free research report helps to visualize whether SYK is currently overvalued by the market.
  3. Other performing stocks: Are there other stocks offering better prospects with proven track records? Explore our free list of these large stocks here.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at the address editorial-team@simplywallst.com.

"data-reactid =" 54 "> To help readers understand the short-term volatility of the financial market, we aim to provide you with a long-term research analysis based only on fundamental data. account of the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.