Course 403: Speculative-Growth Stocks
What Has Growth Done to the Balance Sheet?
In this course
1 Introduction
2 Is Sales Growth Outpacing Asset Growth?
3 What's the Growth Trend?
4 Are Net Margins on the Rise?
5 Is the Business Generating Cash?
6 What Has Growth Done to the Balance Sheet?
7 How Has the Stock Performed?
8 Is it Fairly Valued?
9 Conclusion: Numbers Matter

Like most speculative-growth companies, Yahoo doesn't generate enough cash internally to pay for an aggressive expansion. It must look outside for capital--either by borrowing, or by issuing stock in the equity markets. Given the market's ravenous appetite for Internet stocks over the past few years, Yahoo has understandably financed most of its expansion with equity. It had its initial public offering in 1996, and since then it has issued stock to pay for its many acquisitions. It has little long-term debt, which means it doesn't have to worry about interest payments. Overall, its balance sheet looks very healthy. In contrast, AMZN, another highly successful Internet company, has borrowed over $2 billion and is highly leveraged.

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