Hotcopper poster Delphi says YES...I am not so sure. Probably...

Hotcopper poster Delphi says YES...I am not so sure.

Probably the best determinant of this is to look at the debt to equity ratio. Usually I would look at net debt to equity by deducting any cash balances from the total of debt, but the international program I use expresses the ratio without deducting the cash component.

Internationally it rates some 202 companies in the ‘Global Long-Term Care Facilities’ industry and the industry median debt to equity is 0.64 – not a bad litmus test of what is acceptable to the global finance world.

In the Australian/NZ universe I follow 13 companies involved in care and retirement accommodation where the arithmetical average debt/equity ratio is 0.73 ranging from Estia (EHE) at 0.10 to Regis (REG) at 2.28. In fact, there are 4 companies with debt greater than net equity (greater than 1.0).

When looked at in comparison with its peers, Aveo (4^th lowest) is quite comfortable with debt/equity at less than 0.30

Ryman, for instance, the industry star, had a debt/equity of 0.59.

Perhaps Delphi, we are making too much of an issue of the Aveo external debt levels, as the evidence suggests that globally the financiers would advance Aveo even more.

Sure, I am reasonably confident that the half yearlies will show that debt has increased somewhat, but the general trend is down as the development stock overhang is sold.