ASX:TAM Historical Debt Jan 16th 18
Can TAM meet its short-term obligations with the cash in hand?
Since Tanami Gold 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$0.3M, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 29.51x. However, a ratio greater than 3x may be considered as too high, as TAM could be holding too much capital in a low-return investment environment.
Next Steps:
Having no debt on the books means TAM 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. Going forward, its financial position may be different. I admit this is a fairly basic analysis for TAM’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Tanami Gold to get a better picture of the stock by looking at:
1. Historical Performance: What has TAM’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.