Lithium Story

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LAC -- USA Stock  

USD 12.52  0.30  2.34%

The next fiscal quarter end is expected on the 30th of September 2020. The stock is undergoing an active upward rally. As many passive investors are finally getting excited about basic materials space, Lithium Americas Corp could be a good starting point. Here we also measure the ability of Lithium Americas to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.
Published over three weeks ago
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Will Lithium Americas (NYSE:LAC) debt increase in October
Lithium Americas has 161.74 M in debt with debt to equity (D/E) ratio of 1.12, which is OK given its current industry classification. This firm has a current ratio of 4.01, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due.
Lithium Americas financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Lithium Americas, including all of Lithium Americas's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Lithium Americas assets, the company is considered highly leveraged. Understanding the composition and structure of overall Lithium Americas debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Lithium Total Debt

Lithium Americas Corp liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Lithium Americas Corp has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Lithium Americas balance sheet include debt obligations and money owed to different Lithium Americas vendors, workers, and loan providers. Below is the chart of Lithium main long-term debt accounts currently reported on its balance sheet.
You can use Lithium Americas Corp financial leverage analysis tool to get a better grip on understanding its financial position

How important is Lithium Americas's Liquidity

Lithium Americas financial leverage refers to using borrowed capital as a funding source to finance Lithium Americas Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Lithium Americas financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Lithium Americas's total debt and its cash.

Breaking down the case for Lithium Americas

The current price rise of Lithium Americas Corp may encourage investors to take a closer look at the firm as it is trading at a share price of 8.54 on slow start in trading volume. The company executives may have good odds in positioning the firm resources to exploit market volatility in October. The stock standard deviation of daily returns for 30 days investing horizon is currently 7.13. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Lithium Americas Corp partners.

Liabilities Breakdown

Current Liabilities
128.6 M
Long-Term Liabilities
Total Liabilities144.77 Million
Current Liabilities12.15 Million
Long-Term Liabilities128.6 Million
Tax Liabilities1.29 Million

Will Lithium Americas current rise continue?

Current skewness indicator falls down to -0.51. Possible price jump? Lithium Americas Corp is displaying above-average volatility over the selected time horizon. Investors should scrutinize Lithium Americas Corp independently to ensure intended market timing strategies are aligned with expectations about Lithium Americas volatility.

Our Final Take On Lithium Americas

Whereas few other entities within the other industrial metals & mining industry are still a little expensive, even after the recent corrections, Lithium Americas may offer a potential longer-term growth to investors. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor exit any shares of Lithium Americas at this time. The Lithium Americas Corp risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Lithium Americas.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Achuva Shats do not own shares of Lithium Americas Corp. Please refer to our Terms of Use for any information regarding our disclosure principles.

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