Transcorp Group’s lower debt-equity ratio signals stronger balance sheet

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Investors of Transcorp Group should not have butterflies in their stomachs because the firm is not exposed to financial risk and it has enough earnings or financial strength to pay interest on money borrowed.

There is lower risk of debt default as the debt to equity ratio reduced to 63.95 percent in the period under review from 72.49 percent the previous year, according to MoneyCentral calculations.

A lower debt-equity ratio puts the company in a position to easily source for funds because there is no threat of going concerns, and it also gets positive credit ratings from global and local investment houses.

Of course, the conglomerate can effortlessly pay interest on outstanding debt as its operating income covers interest expense 3.28 times, according to MoneyCentral calculations.

What’s more, even amid rising borrowing costs brought on by the central bank’s aggressive tightening stance, finance costs reduced by 14.96 percent to N9.60 billion as at September 2022.