ASX:SWJ Historical Debt Nov 23rd 17
Is SWJ’s level of debt at an acceptable level?
With total debt exceeding equities, SWJ is considered a highly levered company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. Though, since SWJ is currently unprofitable, there’s a question of sustainability of its current operations. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.
Next Steps:
Are you a shareholder? With a high level of debt on its balance sheet, SWJ could still be in a financially strong position if its cash flow also stacked up. However, this isn’t the case, and there’s room for SWJ to increase its operational efficiency. In addition to this, the company may not be able to pay all of its upcoming liabilities from its current short-term assets. Moving forward, its financial position may change. I recommend keeping abreast of market expectations for SWJ’s future growth on our free analysis platform.
Are you a potential investor? SWJ’s high debt levels on top of low cash coverage of debt as well as low liquidity coverage of short-term commitments may not build the strongest investment case. However, keep in mind that this is a point-in-time analysis, and today’s performance may not be representative of SWJ’s track record. As a following step, you should take a look at SWJ’s past performance analysis on our free platform in order to determine for yourself whether its debt position is justified.
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.