Reimagining Leverage and Valuation Metrics
Determining the financial health of Cannabis companies has been an ongoing challenge. Viridian, in its quest for deeper insights, has revolutionized the approach to measuring leverage and valuation in this sector.
Looking Beyond the Norm
While Debt/EBITDA has been the go-to metric, Viridian advocates for a more innovative yardstick: Total Liabilities / Market Cap. This metric captures market sentiments regarding asset value surpassing liabilities, impervious to accounting manipulations and swift to react to value-altering news.
Redefining Parameters
Viridian’s fresh take on metrics includes a meticulous examination of leases, often masquerading as capital, particularly in cannabis firms. The paradigm shift acknowledges lease liabilities as debt, with a significant share in companies like Planet 13, 4Front, Green Thumb, Ascend, and Curaleaf, paving the way for a more precise financial evaluation.
A Holistic Approach
Unraveling the complexities, Viridian unfolds how accrued tax liabilities, essentially unpaid taxes amounting to borrowed funds from the government, adorn the debt landscape. Introducing adjusted net debt, the analysis incorporates leases and excess taxes, resulting in a comprehensive view of financial obligations.
Seeking Balance
Recognizing the impact of lease expenses on EBITDA, Viridian harmonizes debt evaluation by adjusting EBITDA for leases. It advocates for a similar adjustment in the EV/EBITDA valuation metric, cultivating a more nuanced perspective on financial health.
Reflecting Reality in Metrics
The graph unveils the altered landscape of leverage and valuation metrics, with leases and taxes playing a pivotal role. By delving into these metrics, Viridian aims to present metrics that mirror the true financial fabric of the cannabis industry.
A Comprehensive Insight
Viridian Capital’s Chart of the Week acts as a beacon, shedding light on crucial investment, valuation, and M&A trends extracted from the Viridian Cannabis Deal Tracker, offering unparalleled insights for discerning investors.
The Viridian Cannabis Deal Tracker
This proprietary intelligence service monitors capital raise and M&A activities in the cannabis, CBD, and psychedelics sectors. It dissects closed deals, categorizes them based on vital metrics, unveiling invaluable market trends essential for informed decision-making.
Unveiling Unprecedented Insights
With a rich history dating back to 2015, the Viridian Cannabis Deal Tracker has meticulously tracked over 2,500 capital raises and 1,000 M&A transactions, amounting to a staggering $50 Billion in collective value, standing testament to its unparalleled insights and analysis.
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