Yahoo Finance Is Access Intelligence Plc (LON:ACC) A Financially Sound Company?
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While small-cap stocks, such as Access Intelligence Plc (LON:ACC) with its market cap of UK£35m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Companies operating in the Software industry, in particular ones that run negative earnings, tend to be high risk. Evaluating financial health as part of your investment thesis is crucial. Here are few basic financial health checks you should consider before taking the plunge. Though, given that I have not delve into the company-specifics, I suggest you dig deeper yourself into ACC here.
Does ACC produce enough cash relative to debt?
Over the past year, ACC has reduced its debt from UK£3.3m to UK£1.0m , which also accounts for long term debt. With this debt payback, the current cash and short-term investment levels stands at UK£3.1m for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, 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 assess some of ACC’s operating efficiency ratios such as ROA here.
Can ACC pay its short-term liabilities?
Looking at ACC’s UK£7.7m in current liabilities, it seems that the business arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.86x.
Can ACC service its debt comfortably?
With debt at 24% of equity, ACC may be thought of as appropriately levered. ACC is not taking on too much debt commitment, which may be constraining for future growth. ACC’s risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.
Next Steps:
ACC’s debt level is appropriate for a company its size. Furthermore, it is able to generate sufficient cash flow coverage, meaning it is able to put its debt in good use. But, its low liquidity raises concerns over whether current asset management practices are properly implemented for the small-cap. I admit this is a fairly basic analysis for ACC’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Access Intelligence to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ACC’s future growth? Take a look at our free research report of analyst consensus for ACC’s outlook.
Historical Performance: What has ACC’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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
