Is GCM Resources Plc’s (LON:GCM) Balance Sheet Strong Enough To Weather A Storm?

Is GCM’s debt level acceptable?

GCM’s level of debt is low relative to its total equity, at 2.61%. This range is considered safe as GCM is not taking on too much debt obligation, which may be constraining for future growth. Risk around debt is extremely low for GCM, and the company also has the ability and headroom to increase debt if needed going forward.

Next Steps:

GCM’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. Furthermore, its low liquidity raises concerns over whether current asset management practices are properly implemented for the small-cap. I admit this is a fairly basic analysis for GCM’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research GCM Resources to get a better picture of the stock by looking at:

1. Historical Performance: What has GCM’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.