JAKARTA. The liquidity ratio and cash flow of the Duniatex Group in 2018 shows that the company has the potential to have difficulty repaying its short-term debt.
The company’s 2018 financial report shows that the liquidity ratio, represented by the cash ratio, can only cover 9% of the company’s total short-term debt. Liquidity ratios are ratios that reflect a company’s ability to meet its obligations or pay its short-term debt.
A cash ratio of 0.09 times in 2018 reflects a much greater debt ratio than cash and cash equivalents which reaches 11.6 times. In 2018, Duniatex’s short-term debt reached Rp 12.61 trillion, while cash and cash equivalents only reached Rp 1.08 trillion, citing cnbcindonesia.com.
The cash ratio represents the ratio of the company’s total cash and cash equivalents to current liabilities.
The Duniatex business group consists of six major companies, one of which is PT Delta Merlin Dunia Tekstil (DMDT), which issued global bonds of US$ 300 million in March 2019 and its debt rating has been downgraded to CCC-.
With regard to liquidity ratios, the reference for the comparison of Duniatex’s low liquidity ratios is other textile companies whose shares are listed on the stock exchange and their business size is similar, such as PT Sri Rejeki Isman Tbk (SRIL), PT Indorama Synthetics Tbk (INDR), and PT Pan Brothers Tbk (IND) PBRX).
Duniatex’s ‘drag’ liquidity can also be seen from the company’s negative cash flow in 2018 of Rp 745.96 billion, when the group still recorded a profit of Rp 1.34 trillion.
Source: IDN Financials | 5 August 2019