Cementos Pacasmayo S.A.A. (CPAC) Balance Sheet

The improvement in the D/E ratio from 1.27 in Q1 2024 to 1.03 in Q2 2026 is primarily driven by a 36% increase in retained earnings, suggesting the company is reinvesting operational profits to fortify its financial position. This organic strengthening appears more sustainable than deleveraging through asset sales or external equity raises, aligning with the prior income statement findings of accelerating revenue growth and margin expansion.

The D/E ratio has fluctuated between 1.03 and 1.27 over the past ten quarters, indicating a persistent reliance on debt financing. While the absolute debt level has decreased modestly from its peak, the substantial net debt position relative to the company's cash generation capacity suggests that future debt service is a key commitment of operating cash flow. This leverage profile is typical for capital-intensive industrial firms but leaves less flexibility for discretionary investment or shareholder returns.

The current ratio has improved from 1.09 in Q4 2025 to 1.22 in Q2 2026, providing a modest buffer above the 1.0 threshold. However, the dramatic quarter-to-quarter cash swings suggest that liquidity is tightly managed and may be susceptible to seasonal or project-based cash flow timing. This volatility is consistent with the prior cash flow analysis highlighting erratic cash conversion driven by large working capital shifts.

The steady accumulation of retained earnings, which now constitute approximately 30% of total equity, underscores the quality of the company's earnings power. This trend suggests that CPAC is prioritizing the reinvestment of profits to reduce financial risk rather than pursuing aggressive share repurchases or dividends. The growth in equity has directly contributed to the improved leverage metrics observed over the period.