The Mosaic Company (NYSE:MOS), a large-cap worth $10.49B, comes to mind for investors seeking a strong and reliable stock investment. Risk-averse investors who are attracted to diversified streams of revenue and strong capital returns tend to seek out these large companies. But, the health of the financials determines whether the company continues to succeed. I will provide an overview of Mosaic’s financial liquidity and leverage to give you an idea of Mosaic’s position to take advantage of potential acquisitions or comfortably endure future downturns. Note that this information is centred entirely on financial health and is a high-level overview, so I encourage you to look further into MOS here. View our latest analysis for Mosaic

Does MOS produce enough cash relative to debt?

Over the past year, MOS has maintained its debt levels at around $3,818.2M made up of current and long term debt. At this current level of debt, MOS currently has $673.1M remaining in cash and short-term investments , ready to deploy into the business. Additionally, MOS has generated cash from operations of $1,266.1M during the same period of time, resulting in an operating cash to total debt ratio of 33.16%, meaning that MOS’s current level of operating cash is high enough to cover debt. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In MOS’s case, it is able to generate 0.33x cash from its debt capital.

Does MOS’s liquid assets cover its short-term commitments?

At the current liabilities level of $1,476.8M liabilities, it appears that the company has been able to meet these commitments with a current assets level of $3,057.7M, leading to a 2.07x current account ratio. For Chemicals companies, this ratio is within a sensible range since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.

Can MOS service its debt comfortably?

MOS’s level of debt is appropriate relative to its total equity, at 38.55%. MOS is not taking on too much debt commitment, which may be constraining for future growth. We can check to see whether MOS is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings after interest and tax at least three times its net interest payments is considered financially sound. In MOS’s case, the ratio of 3.86x suggests that interest is well-covered. High interest coverage serves as an indication of the safety of a company, which highlights why many large organisations like MOS are considered a risk-averse investment.