While small-cap stocks, such as Aus Tin Mining Limited (ASX:ANW) with its market cap of A$16.98M, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Since ANW is loss-making right now, it’s vital to understand the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Though, given that I have not delve into the company-specifics, I’d encourage you to dig deeper yourself into ANW here.
Does ANW generate enough cash through operations?
ANW has built up its total debt levels in the last twelve months, from A$0.1M to A$1.1M , which is made up of current and long term debt. With this rise in debt, ANW currently has A$0.6M remaining in cash and short-term investments , ready to deploy into the business. However, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of ANW’s operating efficiency ratios such as ROA here.
Does ANW’s liquid assets cover its short-term commitments?
Looking at ANW’s most recent A$1.2M liabilities, the company has been able to meet these obligations given the level of current assets of A$1.7M, with a current ratio of 1.44x. Usually, for metals and mining companies, this is a suitable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is ANW’s level of debt at an acceptable level?
With a debt-to-equity ratio of 10.73%, ANW’s debt level may be seen as prudent. This range is considered safe as ANW is not taking on too much debt obligation, which may be constraining for future growth. Risk around debt is very low for ANW, and the company also has the ability and headroom to increase debt if needed going forward.
Next Steps:
Are you a shareholder? ANW’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. Given that ANW’s financial situation may change. I suggest keeping abreast of market expectations for ANW’s future growth on our free analysis platform.
Are you a potential investor? Aus Tin Mining currently has financial flexibility to ramp up growth in the future. In addition, its high liquidity means the company should continue to operate smoothly in the case of adverse events. In order to build your conviction in the stock, you need to further examine the company’s track record. I encourage you to continue your research by taking a look at ANW’s past performance analysis on our free platform to figure out ANW’s financial health position.
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.