ASX:VRC Historical Debt Dec 27th 17
Does VRC’s liquid assets cover its short-term commitments?
Since Volt Resources doesn’t have any debt on its balance sheet, it doesn’t have any solvency issues, which is a term 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. With current liabilities at A$0.7M liabilities, the company has not been able to meet these commitments with a current assets level of A$0.3M, leading to a 0.44x current account ratio. which is under the appropriate industry ratio of 3x.
Next Steps:
Are you a shareholder? Having no debt on the books means VRC has more financial freedom to keep growing at its current fast rate. Though, the company’s low liquidity reduces our confidence around meeting short-term obligations. Some level of low-cost debt funding could help address these needs. ] %} Going forward, its financial position may be different. I suggest keeping abreast of market expectations for VRC’s future growth.
Are you a potential investor? VRC’s high growth makes financial flexibility an attractive option. Although, should adverse events arise, its low liquidity raises concerns over whether short term obligations can be met in time. I encourage you to continue your research by taking a look at VRC’s past performance in order to determine for yourself whether its zero-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.