ASX:CSE Historical Debt Dec 12th 17
Can CSE pay its short-term liabilities?
Given zero long-term debt on its balance sheet, Copper Strike has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. However, another measure of financial health is its short-term obligations, which is known as liquidity. These include payments to suppliers, employees and other stakeholders. Looking at CSE’s most recent A$0.0M liabilities, it appears that the company has been able to meet these obligations given the level of current assets of A$0.5M, with a current ratio of 19.99x. However, a ratio greater than 3x may be considered as too high, as CSE could be holding too much capital in a low-return investment environment.
Next Steps:
Are you a shareholder? As CSE’s revenues are not growing at a fast enough pace, being in a zero-debt position isn’t always optimal. As an investor, you may want to figure out if there are company-specific reasons for not having any debt, and whether the company needs financial flexibility at this point in time. I recommend taking a look into a future growth analysis to account for the company’s position.
Are you a potential investor? In terms of meeting is short term obligations, there’s nothing to worry about for CSE. Though, its soft revenue growth means there’s potential to improve return on capital by taking on some debt and ramp up growth. This is only a rough assessment of financial health, and I’m sure CSE has company-specific issues impacting its capital structure decisions. You should continue your analysis by taking a look at CSE’s past performance to conclude on CSE’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.