Yahoo Finance Alba Mineral Resources PLC (LON:ALBA): Time For A Financial Health Check
Investors are always looking for growth in small-cap stocks like Alba Mineral Resources PLC (AIM:ALBA), with a market cap of UK£7.41M. However, an important fact which most ignore is: how financially healthy is the business? Since ALBA is loss-making right now, it’s crucial to understand the current state of its operations and pathway to profitability. Here are few basic financial health checks you should consider before taking the plunge. Nevertheless, I know these factors are very high-level, so I recommend you dig deeper yourself into ALBA here.
How does ALBA’s operating cash flow stack up against its debt?
ALBA has sustained its debt level by about UK£253.07K over the last 12 months made up of predominantly near term debt. At this stable level of debt, the current cash and short-term investment levels stands at UK£626.94K for investing into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, 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 examine some of ALBA’s operating efficiency ratios such as ROA here.
Can ALBA pay its short-term liabilities?
With current liabilities at UK£433.09K, it seems that the business has been able to meet these obligations given the level of current assets of UK£662.22K, with a current ratio of 1.53x. Usually, for Metals and Mining companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.
Can ALBA service its debt comfortably?
With a debt-to-equity ratio of 5.05%, ALBA’s debt level is relatively low. ALBA is not taking on too much debt commitment, which may be constraining for future growth. Investors’ risk associated with debt is virtually non-existent with ALBA, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Next Steps:
Although ALBA’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for ALBA’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Alba Mineral Resources to get a better picture of the stock by looking at:
Historical Performance: What has ALBA’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 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.
