The screener is based on the companies with literally zero debt on their balance sheet and a strong average Return on Equity. Zero debt companies are generally strong in fundamentals as they don’t have any interest costs to worry about, which also results in a higher profit margin.
During an economic slowdown, many debt-heavy firms’ profits dip owing to falling sales and payment of fixed interest while companies with no debt or less debt need not worry about the same. Debt-free companies mostly fund their Capex through internal accruals and the least preference is equity funding. However, companies have different kinds of risks such as the nature of the industry, business, operations, etc.
Other articles you may like
- Merger of Axis Capital Builder Fund – Series 4 with Axis Flexi Cap Fund
- Introduction of SIP Pause facility under the Schemes of IIFL Mutual Fund (IIFLMF)
- IDFC Mutual Fund stands changed to Bandhan Mutual Fund with effect from March 13, 2023
- Temporary suspension of subscription in Overseas schemes of Motilal Oswal Mutual Fund
- Take charge of your money with this quick and simple framework