Among these are avoiding companies with too much debt; looking for a margin of safety, such as over - 2.0 current ratio (current assets
dividend by current liabilities); and seeking stocks trading at low price - earnings ratios and low price - to - book - value ratios.
Not exact matches
The second major protective factor is the company's fortress - like balance, specifically one marked
by an enormous net cash position (enough to fund the
dividend for 18 years), and one of the highest
current ratios (short - term assets / short - term
liabilities) in the industry, indicating the company has no problems servicing its debt or
liabilities.
Those periodic special
dividends are feasible because of the firm's immaculate balance sheet, which has almost no debt, relatively high cash levels (relative to the size of the company and its acquisitions), and a high
current ratio (i.e. the company's short - term assets cover its short - term
liabilities by more than three-fold, thus protecting it from unexpected negative financial strains, such as during recessions when demand from restaurants can lead to declining sales, earnings, and cash flow).