Stocks with market capitalization between $2B and $10B, such as Public Joint Stock Company Acron (MISX:AKRN) with a size of RUРУБ172.20B, do not attract as much attention from the investing community as do the small-caps and large-caps. Surprisingly though, when accounted for risk, mid-caps have delivered better returns compared to the two other categories of stocks. This article will examine AKRN’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into AKRN here. View our latest analysis for Acron
Does AKRN generate an acceptable amount of cash through operations?
AKRN has shrunken its total debt levels in the last twelve months, from RUРУБ79.15B to RUРУБ74.54B , which is made up of current and long term debt. With this debt repayment, AKRN currently has RUРУБ14.30B remaining in cash and short-term investments for investing into the business. Moreover, AKRN has produced RUРУБ16.63B in operating cash flow during the same period of time, resulting in an operating cash to total debt ratio of 22.31%, meaning that AKRN’s current level of operating cash is high enough to cover debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In AKRN’s case, it is able to generate 0.22x cash from its debt capital.
Can AKRN pay its short-term liabilities?
At the current liabilities level of RUРУБ34.15B liabilities, it seems that the business has been able to meet these obligations given the level of current assets of RUРУБ40.10B, with a current ratio of 1.17x. For Chemicals companies, this ratio is within a sensible range as there’s enough of a cash buffer without holding too capital in low return investments.
Does AKRN face the risk of succumbing to its debt-load?
With debt reaching 81.96% of equity, AKRN may be thought of as relatively highly levered. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can check to see whether AKRN is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In AKRN’s, case, the ratio of 5.97x suggests that interest is appropriately covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
AKRN’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. I admit this is a fairly basic analysis for AKRN’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Acron to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AKRN’s future growth? Take a look at our free research report of analyst consensus for AKRN’s outlook.
- Valuation: What is AKRN 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 AKRN 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.