LSE:AYM Historical Debt Nov 7th 17
There are many headwinds that come unannounced, such as natural disasters and political turmoil, which can challenge a small business and its ability to adapt and recover. These adverse events bring devastation and yet does not absolve the company from its debt. Can AYM pay off what it owes to its debtholder by using only cash from its operational activities? AYM’s recent operating cash flow was -0.04 times its debt within the past year. This means what AYM can generate on an annual basis, which is currently a negative value, does not cover what it actually owes its debtors in the near term. This raises a red flag, looking at AYM’s operations at this point in time.
Can AYM pay its short-term liabilities?
What about its other commitments such as payments to suppliers and salaries to its employees? During times of unfavourable events, AYM could be required to liquidate some of its assets to meet these upcoming payments, as cash flow from operations is hindered. We test for AYM’s ability to meet these needs by comparing its cash and short-term investments with current liabilities. Our analysis shows that AYM does have enough liquid assets on hand to meet its upcoming liabilities, which lowers our concerns should adverse events arise.
Can AYM service its debt comfortably?
A substantially higher debt poses a significant threat to a company’s profitability during a downturn. In the case of AYM, the debt-to-equity ratio is 27.86%, which indicates that its debt is at an acceptable level.
Next Steps:
Are you a shareholder? AYM’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. Though, the company will be able to pay all of its upcoming liabilities from its current short-term assets. Given that AYM’s financial situation may change. I recommend keeping on top of market expectations for AYM’s future growth on our free analysis platform.
Are you a potential investor? Anglesey Mining currently has financial flexibility to ramp up growth in the future. Furthermore, its high liquidity ensures the company will continue to operate smoothly should unfavourable circumstances arise. To gain more conviction in the stock, you need to also examine AYM’s track record. As a following step, you should take a look at AYM’s past performance analysis on our free platform to figure out AYM’s financial health position.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.