METRIC FIT · FINANCE
Financial health
How well it holds out
how much debt a company carries and whether it can handle its immediate payments and interest
My weights and the Jupick grade weights
Earnings
Financial health
Dividends
Valuation
Answer the questions and the weights you set will appear here.
What it means
People who put this axis first see a company as "an organization that has to hold out". It is a view that checks first whether a company holds up in bad times rather than how it performs in good times.
The strength of this view is that it looks at the worst first. Profit can recover after one bad year, but once the ability to pay collapses there may be no chance to recover at all. However strong its earnings, a company whose financial health has collapsed makes the other numbers lose their meaning.
The metrics on this axis, though, depend especially strongly on the industry. In finance, interest expense is not a cost but the cost of funding, so interest coverage does not apply, and capital-heavy industries have structurally high debt-to-equity ratios. That is why Jupick writes out the reason for an empty cell on this axis rather than leaving a plain dash.
How it shows up
- You check whether debt grew before looking at the earnings release
- You first imagine "what happens if this company gets into trouble"
- Even with good profitability, a lot of debt makes you uneasy
This axis’s weight in the Jupick grade
35%Share of the 100-point overall grade that this axis makes up
This is the axis with the second-largest weight in the Jupick grade. Together with earnings, these two axes decide most of the grade.
What this axis does not tell you
Little debt and a well-run business are different things. A company that does nothing to grow also has a low debt-to-equity ratio.
This axis cannot catch burdens not written in the financial statements. Things like litigation risk or long-term purchase commitments do not arrive as numbers.
The current ratio is a snapshot of one moment. Books tidied up just before the reporting date can differ from the usual books.
Metrics that measure this axis
- Debt-to-equity ratioKorean 90% · US 70%How large liabilities are relative to equity, a leading measure of financial health.
- Current ratioKorean 153% · US 111%How large the assets that can be turned into cash within a year are, relative to the debts due within a year.
- Interest coverageKorean 7.4x · US 8.7xHow many times a year's operating income could pay the interest expense.
The middle value is the one that sits at the exact center when the stocks Jupick covers are lined up by size, recounted once a day. Stocks with fill-in values are left out, so the value is empty when the sample is too small.
What the other three axes look at
This assessment is reference content that describes ways of reading metrics. It is not a suggestion to trade any stock or product and not investment advice. Investment decisions and their responsibility rest with you.