Investors pursuing a solid, dependable stock investment can often be led to Yara International ASA (OB:YAR), a large-cap worth ØRE91.25B. One reason being its ‘too big to fail’ aura which gives it the appearance of a strong and stable investment. However, the health of the financials determines whether the company continues to succeed. Let’s take a look at Yara International’s leverage and assess its financial strength to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into YAR here. Check out our latest analysis for Yara International
How much cash does YAR generate through its operations?
Over the past year, YAR has ramped up its debt from US$1.92B to US$2.91B , which comprises of short- and long-term debt. With this rise in debt, YAR currently has US$544.37M remaining in cash and short-term investments for investing into the business. Additionally, YAR has generated cash from operations of US$791.38M in the last twelve months, leading to an operating cash to total debt ratio of 27.17%, indicating that YAR’s operating cash is sufficient to cover its debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In YAR’s case, it is able to generate 0.27x cash from its debt capital.
Does YAR’s liquid assets cover its short-term commitments?
At the current liabilities level of US$2.63B liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.82x. Generally, for Chemicals companies, this is a reasonable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Can YAR service its debt comfortably?
YAR’s level of debt is appropriate relative to its total equity, at 34.98%. YAR is not taking on too much debt commitment, which may be constraining for future growth.
YAR’s debt level is appropriate for a company its size, and it is also able to generate sufficient cash flow coverage, meaning it has been able to put its debt in good use. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for YAR’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Yara International to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for YAR’s future growth? Take a look at our free research report of analyst consensus for YAR’s outlook.
- Valuation: What is YAR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether YAR is currently mispriced by the market.
- 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.