AIM:AXM Historical Debt Dec 21st 17
Does AXM’s liquid assets cover its short-term commitments?
Given zero long-term debt on its balance sheet, Alexander Mining has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. At the current liabilities level of £0.6M liabilities, the company is not able to meet these obligations given the level of current assets of £0.3M, with a current ratio of 0.48x below the prudent level of 3x.
Next Steps:
Are you a shareholder? Having no debt on the books means AXM has more financial freedom to keep growing at its current fast rate. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Moving forward, its financial position may be different. I recommend keeping abreast of market expectations for AXM’s future growth.
Are you a potential investor? AXM’s high growth makes financial flexibility an attractive option. Moreover, its high liquidity means the company should continue to operate smoothly in the case of adverse events. In order to build your conviction in the stock, you need to also examine the company’s track record. As a following step, you should take a look at AXM’s past performance to figure out AXM’s financial health position.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.