Trinity Biotech plc (NASDAQ:TRIB) is a small-cap-stock with a market capitalization of USD $135 Million. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? A major downturn in the energy industry has resulted in over 150 companies going bankrupt and has put more than 100 on the verge of a collapse, primarily due to excessive debt.
When a company is faced with an extreme event undercutting its profits or disrupting its operations temporarily, it’s the company’s ability to meet short-term obligations which allows it to remain in the business. Here are few basic financial health checks to judge whether a company fits the bill or there is an additional risk which you should consider before taking the plunge.