not_yet_bill_gates

Potash Corp: Liquidity Trouble Ahead?

POT has had a current ratio well above 1.5 in the past. It has dipped only for the last quarter which has happened due to two reasons - the current assets has not grown during the quarter because the cash generated in the quarter (close to a billion just for the quarter incidentally) has been used to buy back equity. So, that restricted the current asset level thought not for any reason to be worried about. At the same time, the current liability went up because of short term debt going up by dramatically.

I do not think any company would buy back billions in dollars of equity if they were going to have trouble paying their bills. So, it could be an anomaly in accounting that would get cleared next quarter. And it looks more like that than anything else.

Of course, would love to understand if there is information on anything contrary.