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The Aussie Broadband Ltd (ASX:ABB) rose in Monday afternoon trading. As of this writing, the stock is trading down 3% at $3.10 apiece with no news.
As the growth/tech trade unfolded in 2022, investors prioritized fundamentals.
That said, let’s take a look at Aussie Broadband’s financial situation and how it relates to its stock price.
Aussie Broadband Balance Sheet Analysis
Looking at the company’s balance sheet, we see that it has total assets of $297 million in the first half of FY22. On that basis, it has long-term liabilities of $29 million. dollars.
It also held more than $168 million in cash in the first half of FY22, compared to $57 million in the prior corresponding period (pcp).
Moreover, its debt ratio is only 10.5%, while the debt as a percentage of total capital of the Aussie is only 13%, suggesting that the company is low in debt.
It also covers its interest payment over 4 times from operating income, while generating $2.20 for every dollar invested in its asset base.
These numbers appear to be supportive of Aussie Broadband stock price.
Additionally, the company appears to be meeting its short-term obligations as they come due. Short-term liabilities are covered more than 3 times by liquid assets, against 1.5 times in the PCP.
Following its performance in the last six months, it generated a 3.8% return on assets and a 6% return on equity for the 6 months to December 2021.
Net-net, investors had $190 million in equity at the time of Aussie Broadband’s last earnings report.
Based on this rudimentary analysis, it appears that the company is reasonably well capitalized and will continue to meet its financial obligations as they come due.
Over the past 12 months, Aussie Broadband’s share price has gained 11%.