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Boliden AB (STO:BOL): Time For A Financial Health Check

Boliden AB (OM:BOL), a large-cap worth KR173.60B, comes to mind for investors seeking a strong and reliable stock investment. One reason being its ‘too big to fail’ aura which gives it the appearance of a strong and stable investment. But, the key to their continued success lies in its financial health. I will provide an overview of Boliden’s financial liquidity and leverage to give you an idea of Boliden’s position to take advantage of potential acquisitions or comfortably endure future downturns. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into BOL here. View our latest analysis for Boliden

How does BOL’s operating cash flow stack up against its debt?

Over the past year, BOL has reduced its debt from KR10.10B to KR5.34B , which is made up of current and long term debt. With this debt payback, BOL’s cash and short-term investments stands at KR2.51B , ready to deploy into the business. Moreover, BOL has generated cash from operations of KR12.74B during the same period of time, leading to an operating cash to total debt ratio of 238.43%, meaning that BOL’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 BOL’s case, it is able to generate 2.38x cash from its debt capital.

Does BOL’s liquid assets cover its short-term commitments?

Looking at BOL’s most recent KR9.88B liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.6x. 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.

OM:BOL Historical Debt Jun 8th 18
OM:BOL Historical Debt Jun 8th 18

Is BOL’s debt level acceptable?

With debt at 17.32% of equity, BOL may be thought of as appropriately levered. This range is considered safe as BOL is not taking on too much debt obligation, which may be constraining for future growth. We can test if BOL’s debt levels are sustainable by measuring interest payments against earnings of a company. As a rule of thumb, a company should have earnings before interest and tax (EBIT) of at least three times the size of net interest. For BOL, the ratio of 64.23x suggests that interest is comfortably covered. High interest coverage serves as an indication of the safety of a company, which highlights why many large organisations like BOL are considered a risk-averse investment.

Next Steps:

BOL’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure BOL has company-specific issues impacting its capital structure decisions. I suggest you continue to research Boliden to get a better picture of the stock by looking at:

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  1. Future Outlook: What are well-informed industry analysts predicting for BOL’s future growth? Take a look at our free research report of analyst consensus for BOL’s outlook.

  2. Valuation: What is BOL 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 BOL is currently mispriced by the market.

  3. 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.