ASX:FMS Historical Debt Jan 17th 18
Can FMS pay its short-term liabilities?
Given zero long-term debt on its balance sheet, Flinders Mines 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$0.9M liabilities, the company has been able to meet these commitments with a current assets level of A$10.7M, leading to a 11.33x current account ratio. Though, anything above 3x is considered high and could mean that FMS has too much idle capital in low-earning investments.
Next Steps:
Having no debt on the books means FMS 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 be different. I admit this is a fairly basic analysis for FMS’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Flinders Mines to get a better picture of the stock by looking at:
1. Historical Performance: What has FMS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.