ASX:DAU Historical Debt Jan 2nd 18
Does DAU’s liquid assets cover its short-term commitments?
Given zero long-term debt on its balance sheet, Dampier Gold has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. At the current liabilities level of A$0.1M liabilities, it seems that the business has been able to meet these commitments with a current assets level of A$3.3M, leading to a 28.83x current account ratio. However, anything about 3x may be excessive, since DAU may be leaving too much capital in low-earning investments.
Next Steps:
Are you a shareholder? Having no debt on the books means DAU has more financial freedom to keep growing at its current fast rate. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Moving forward, its financial position may change. I recommend keeping abreast of market expectations for DAU’s future growth.
Are you a potential investor? Dampier Gold is a fast-growing company, making financial flexibility a valuable option for the company. Furthermore, its high liquidity ensures the company will continue to operate smoothly should unfavourable circumstances arise. In order to build your confidence in the stock, you need to further analyse DAU’s track record. I encourage you to continue your research by taking a look at DAU’s past performance to conclude on DAU’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.