Reading cash flows statement for debt servicing ratio - Dividend Machines by The Fifth Person

Q&A › Category: Dividend Stocks › Reading cash flows statement for debt servicing ratio

TT asked 3 years ago

Hi, I am going through one of the company in the watchlist, Straits Trading, to practise the 8-steps. Question on the debt servicing ratio. In the 2022 AR, pg 37, cash flow, https://ir.listedcompany.com/tracker.pl?type=5&id=266632&m=60f827a3d5fbea9a02925ec584e8b238677301a48338b97896c24fdbd2d26df2&redirect=https%3A%2F%2Fstraitstrading.listedcompany.com%2Fnewsroom%2F20230406_185215_S20_LHYSVO96UCSKSI0G.1.pdf. There are 2 different set of interest expense and income. See attached. Which one should i take? The correct DSR would be which one?

(43.9-15.1) / 65.2 or
(24.7 - 3.3) / 65.2

What is the difference between the 2 sets of interest figures?

Attachments

Screenshot-2023-04-30-174552.jpg

1 Answers

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Rusmin Ang Staff answered 3 years ago

Hi TT, Look at the one at Income Statement and ignore the bracket when calculating the ratio.

TT replied 3 years ago

Hi Rusmin
Thanks for the clarification. Is it normal for conglomerate to have a high debt servicing ratio?

Rusmin Ang Staff replied 3 years ago

Well, they could get into trouble if the debt is too high. ST has some dividends income as well, you may want minus it from their financing cost. They have quite a bit of investment properties, that could b the reason of higher debt.