Is Diatreme Resources Limited’s (ASX:DRX) Balance Sheet A Threat To Its Future?

Can DRX service its debt comfortably?

With a debt-to-equity ratio of 14.06%, DRX’s debt level may be seen as prudent. This range is considered safe as DRX is not taking on too much debt obligation, which may be constraining for future growth. Investors’ risk associated with debt is very low with DRX, and the company has plenty of headroom and ability to raise debt should it need to in the future.

Next Steps:

Although DRX’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven’t considered other factors such as how DRX has been performing in the past. I recommend you continue to research Diatreme Resources to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

1. Historical Performance: What has DRX’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 DRX’s historicals for more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a 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.