Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as Borr Drilling Limited (OB:BDRILL), with a market cap of ØRE20.08B, often get neglected by retail investors. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. Let’s take a look at BDRILL’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into BDRILL here. Check out our latest analysis for Borr Drilling
How does BDRILL’s operating cash flow stack up against its debt?
BDRILL has increased its debt level by about US$87.00M over the last 12 months comprising of short- and long-term debt. With this ramp up in debt, the current cash and short-term investment levels stands at US$164.00M , ready to deploy 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. For this article’s sake, I won’t be looking at this today, but you can assess some of BDRILL’s operating efficiency ratios such as ROA here.
Can BDRILL pay its short-term liabilities?
Looking at BDRILL’s most recent US$21.10M liabilities, the company has been able to meet these commitments with a current assets level of US$225.50M, leading to a 10.69x current account ratio. Though, anything above 3x is considered high and could mean that BDRILL has too much idle capital in low-earning investments.
Is BDRILL’s debt level acceptable?
BDRILL’s level of debt is low relative to its total equity, at 5.83%. BDRILL is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. Investors’ risk associated with debt is virtually non-existent with BDRILL, and the company has plenty of headroom and ability to raise debt should it need to in the future.
BDRILL’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 BDRILL’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Borr Drilling to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BDRILL’s future growth? Take a look at our free research report of analyst consensus for BDRILL’s outlook.
- Historical Performance: What has BDRILL’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.