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Balance Sheet Analysis on Rite Aid Stock

RAD Debt to Assets (Quarterly) Chart
RAD Debt to Assets (Quarterly) Chart

RAD Debt to Assets (Quarterly) data by YCharts .

Looking at it another way, if Rite Aid liquidated all its existing assets, including cash and inventory, it still could not cover the amount it owes in long-term debt.

Although that's a bit scary, there are some encouraging signs on the balance sheet that investors can rally behind.For example, Rite Aid's cash and equivalents, or money that can be easily tapped, has climbed from less than $125 million in 2013 to $185 million. Meanwhile, the company's long-term debt fell from a peak of over $6 billion last year to less than $5.6 billion in the last quarter.

Continuing to continue

Rite Aid's suspect balance sheet probably isn't too surprising to most of the company's investors. After all, the company's share price was hovering near $1 per share not that long ago over concerns that it would never get back on track. So, Rite Aid investors tend to focus less on the absolute numbers on the balance sheet and more on their trends.

Investors should typically avoid that kind of thinking, but in Rite Aid's case many intriguing catalysts could support growth in the coming years, including aging baby boomers' increasing demand for prescription drugs, rising insurance enrollment tied to healthcare reform, and the potential to provide more healthcare services through in-store retail clinics. For those reasons, investors considering Rite Aid might want to keep an eye on the balance sheet each quarter to make sure cash and debt are trending the right way. Regardless, the balance sheet suggests Rite Aid is only suitable for the most risk-tolerant of investors.

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The article Balance Sheet Analysis on Rite Aid Stock originally appeared on Fool.com.

Todd Campbell is long Rite Aid. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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