ASX:ORN Historical Debt Nov 22nd 17
Can ORN pay its short-term liabilities?
Looking at ORN’s most recent A$1M liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 3.63x. However, anything about 3x may be excessive, since ORN may be leaving too much capital in low-earning investments.
Does ORN face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 90.20%, ORN can be considered as an above-average leveraged company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. However, since ORN is currently unprofitable, there’s a question of sustainability of its current operations. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
Next Steps:
Are you a shareholder? At its current level of cash flow coverage, ORN has room for improvement to better cushion for events which may require debt repayment. Though, its high liquidity means the company should continue to operate smoothly in the case of adverse events. Given that ORN’s financial situation may change. I suggest researching market expectations for ORN’s future growth on our free analysis platform.
Are you a potential investor? ORN’s high debt levels is not met with high cash flow coverage. This leaves room for improvement in terms of debt management and operational efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. I encourage you to continue your research by taking a look at ORN’s past performance analysis on our free platform to conclude on ORN’s financial health.
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.