Aus Tin Mining Limited (ASX:ANW): Time For A Financial Health Check
While small-cap stocks, such as Aus Tin Mining Limited (ASX:ANW) with its market cap of AU$33.37M, 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, since I only look at basic financial figures, I suggest you dig deeper yourself into ANW here.
How does ANW’s operating cash flow stack up against its debt?
ANW has built up its total debt levels in the last twelve months, from AU$128.52K to AU$1.06M , which is made up of current and long term debt. With this growth in debt, ANW’s cash and short-term investments stands at AU$591.85K for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, 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 assess some of ANW’s operating efficiency ratios such as ROA here.
Can ANW pay its short-term liabilities?
With current liabilities at AU$1.15M, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.44x. Generally, for Metals and Mining companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is ANW’s debt level acceptable?
ANW’s level of debt is low relative to its total equity, at 9.82%. ANW is not taking on too much debt commitment, which may be constraining for future growth. ANW’s risk around capital structure is almost non-existent, and the company has the headroom and ability to raise debt should it need to in the future.
Next Steps:
ANW’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. However, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for ANW’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Aus Tin Mining to get a more holistic view of the stock by looking at:
1. Historical Performance: What has ANW’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.
