【do you have to have a license to bartend】How Financially Strong Is Anglo African Agriculture Plc (LON:AAAP)?
Anglo African Agriculture Plc (
LON:AAAP
),do you have to have a license to bartend which has zero-debt on its balance sheet, can maximize capital returns by increasing debt due to its lower cost of capital. However, the trade-off is AAAP will have to follow strict debt obligations which will reduce its financial flexibility. While zero-debt makes the due diligence for potential investors less nerve-racking, it poses a new question: how should they assess the financial strength of such companies? I will go over a basic overview of the stock’s financial health, which I believe provides a ballpark estimate of their financial health status.
View our latest analysis for Anglo African Agriculture
Is financial flexibility worth the lower cost of capital?
Debt funding can be cheaper than issuing new equity due to lower interest cost on debt. But the downside of having debt in a company’s balance sheet is the debtholder’s higher claim on its assets in the case of liquidation, as well as stricter capital management requirements. Either AAAP does not have access to cheap capital, or it may believe this trade-off is not worth it. This makes sense only if the company has a competitive edge and is growing fast off its equity capital. AAAP delivered a negative revenue growth of -16%. While its negative growth hardly justifies opting for zero-debt, if the decline sustains, it may find it hard to raise debt at an acceptable cost.
LSE:AAAP Historical Debt January 1st 19
Does AAAP’s liquid assets cover its short-term commitments?
Since Anglo African Agriculture 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 UK£827k, it seems that the business may not have an easy time meeting these commitments with a current assets level of UK£530k, leading to a current ratio of 0.64x.
Next Steps:
Having no debt on the books means AAAP has more financial freedom to keep growing at its current fast rate. However, the company’s low liquidity reduces our conviction around meeting short-term commitments. Some level of low-cost debt funding could help meet these needs. Moving forward, its financial position may be different. This is only a rough assessment of financial health, and I’m sure AAAP has company-specific issues impacting its capital structure decisions. I recommend you continue to research Anglo African Agriculture to get a more holistic view of the stock by looking at:
Story continues
Historical Performance
: What has AAAP’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.
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 past 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. For errors that warrant correction please contact the editor at
.
View comments
下一篇:SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Sasol Limited of Class Action Lawsuit and Upcoming Deadline - SSL
相关文章:
- Analysts Just Slashed Their China Cinda Asset Management Co., Ltd. (HKG:1359) EPS Numbers
- Lam Research unveils improved tool to make 3-D chips for phones, devices
- From wagyu beef to melons, Japan's $2.2 trillion virus rescue piques struggling firms
- Despite Its High P/E Ratio, Is Ovzon AB (publ) (STO:OVZON) Still Undervalued?
- Key Things To Watch Out For If You Are After Richardson Electronics, Ltd.'s (NASDAQ:RELL) 6.7% Dividend
- Gaming platform Roblox acquires Imbellus assets ahead of IPO
- Omaha Public Facilities Corporation, NE -- Moody's assigns Aa2 to Omaha, NE's lease bonds; outlook stable
- OneWater Marine Inc. Announces Fiscal Fourth Quarter and Full-Year 2020 Earnings Release Date and Conference Call Information
- SHAREHOLDER ACTION NOTICE: The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against Align Technology, Inc. and Encourages Investors with Losses in Excess of $100,000 to Contact the Firm
- TUI Strikes Compensation Deal With Boeing Over 737 MAX Jets
相关推荐:
- Analysts Just Slashed Their China Cinda Asset Management Co., Ltd. (HKG:1359) EPS Numbers
- Were Hedge Funds Right About Automatic Data Processing (ADP)?
- Dow Inc. (DOW) Gains But Lags Market: What You Should Know
- Cheniere seeks U.S. permission to put Oklahoma Midship natgas pipe in service
- EU’s Digital Services Act Advocates Speak Up
- SHAREHOLDER ACTION NOTICE: The Schall Law Firm Announces it is Investigating Claims Against Canaan Inc. and Encourages Investors with Losses to Contact the Firm
- REFILE-Taiwan scrambles diplomats to keep flights going amid China virus inclusion
- 2 Beaten-Up Penny Stocks That Are Set for a Rebound
- Otter Tail (OTTR) Tops Q3 Earnings and Revenue Estimates
- Eversource (ES) Q3 Earnings Lag, Revenues Beat Estimates
- ESTA Announces Participation in the Goldman Sachs Global Healthcare Conference
- Do companies sometimes 'ghost' job applicants? Ask HR
- Brazil manufacturing PMI rises to 38.3 in May from record low 36.0 in April - IHS Markit
- WRAPUP 1-Standard U.S. economic weapons may be inadequate for coronavirus crisis
- OneWater Marine Inc. Announces Fiscal Fourth Quarter and Full-Year 2020 Earnings Release Date and Conference Call Information
- Vaccines Market Worth $62.2 Billion by 2027, Growing at a CAGR of 5.2% from 2019- Global Opportunity Analysis and Industry Forecasts by Meticulous Research®
- Here's What World Precision Machinery Limited's (SGX:B49) P/E Is Telling Us
- Recap: Mallinckrodt Q1 Earnings
- Mitch Gould and Nutritional Products International Welcome Record-Shattering GDP for Third Quarter
- As coronavirus misinformation spreads on social media, Facebook removes posts