FIGS, FIGS Inc.

Will it survive?

• Can it pay its interest? —
  No meaningful interest burden
  Little or no interest expense reported
  What this means

  Little or no interest expense reported, the business isn't leaning on lenders to operate.

• How heavy is the debt, net of cash? +$82M
  Net cash, debt-free
  Cash $82M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $82M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 193d
  Long (60+ days)
  DSO 3 + DIO 221 − DPO 31 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital —
  Not enough data
  Industry peers: median 14%
  What this means

  The filing data didn't include the inputs for this check.

• Owner-earnings margin 8%
  Solid through the cycle
  7-yr median margin, range -7%–18%; latest $53M = operating cash $61M − maintenance capex $8M
  Industry peers: median 5%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 8% of revenue this year, a 8% median across 7 years. Treating stock comp as the real expense it is (less $27M of SBC) leaves $26M.

• Are earnings backed by cash? 1.79×
  Cash-backed
  Cash from ops $61M ÷ net income $34M

  In the filing’s words The filing leans on adjusted, non-GAAP earnings, but the GAAP profit is itself cash-backed — the adjustments are not papering over a cash shortfall here.

  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 5%
  Reinvests most of it
  Dividends + buybacks $3M ÷ Owner Earnings $53M
  What this means

  Of $53M Owner Earnings, $3M (5%) went back to shareholders, $0 dividends, $3M buybacks. But the buybacks barely exceed stock issued to employees ($27M SBC), net of dilution, little was truly returned. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 0.90×
  Maintaining
  Capex $8M ÷ depreciation $9M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $631M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 4.94×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Earnings stability Near
  A profit every year (7-yr record) · 1 loss year
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Miss
  Uninterrupted dividends · none paid
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Pass
  Earnings +33% over the record · +48%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $0.12/share (latest year $0.21), the averaged base the calculator's gate runs on, and book value is $2.63/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2019–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 6 of 7
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Operating margin 8% → 4% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 8% early to 4% lately, median 6% — competition or costs are biting in.

• Owner earnings growth +30%/yr
  What this means

  Owner earnings grew about 30% a year over the record.

• Worst year 2019 · −0.3% op. margin
  What this means

  Operations went underwater in 2019, understand why before trusting the good years.

• Share count +2.6%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.