ASX:PMY Historical Debt Dec 14th 17
Does PMY’s liquid assets cover its short-term commitments?
Given zero long-term debt on its balance sheet, Pacifico Minerals 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 PMY’s most recent A$0.2M liabilities, it seems that the business has been able to meet these commitments with a current assets level of A$1.6M, leading to a 9.69x current account ratio. Though, anything above 3x is considered high and could mean that PMY has too much idle capital in low-earning investments.
Next Steps:
Are you a shareholder? As PMY’s revenues are not growing at a fast enough pace, not taking advantage of lower cost debt may not be the best strategy. As an investor, you may want to figure out if there are company-specific reasons for not having any debt, and why financial flexibility is needed at this stage in its business cycle. I recommend taking a look into a future growth analysis to examine the company’s position.
Are you a potential investor? In terms of meeting is short term obligations, there’s nothing to worry about for PMY. Though, a relatively low revenue growth could hurt returns, meaning there is some benefit to looking at low-cost funding alternatives. Keep in mind I haven’t considered other factors such as how PMY has been performing in the past. I encourage you to continue your research by taking a look at PMY’s past performance to conclude on PMY’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.