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Is Max Resource Corp’s (CVE:MXR) Balance Sheet Strong Enough To Weather A Storm?

Max Resource Corp (TSXV:MXR) is a small-cap stock with a market capitalization of CA$7.32M. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that MXR is not presently profitable, it’s crucial to assess the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Though, I know these factors are very high-level, so I suggest you dig deeper yourself into MXR here.

How does MXR’s operating cash flow stack up against its debt?

MXR has built up its total debt levels in the last twelve months, from CA$67.85K to CA$84.89K , which is mainly comprised of near term debt. With this rise in debt, MXR’s cash and short-term investments stands at CA$43.31K , ready to deploy into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of MXR’s operating efficiency ratios such as ROA here.

Can MXR pay its short-term liabilities?

With current liabilities at CA$210.00K, it seems that the business has not maintained a sufficient level of current assets to meet its obligations, with the current ratio last standing at 0.21x, which is below the prudent industry ratio of 3x.

TSXV:MXR Historical Debt Mar 16th 18
TSXV:MXR Historical Debt Mar 16th 18

Is MXR’s debt level acceptable?

With a debt-to-equity ratio of 69.47%, MXR can be considered as an above-average leveraged company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. But since MXR is currently loss-making, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.

Next Steps:

MXR’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. Furthermore, its lack of liquidity raises questions over current asset management practices for the small-cap. This is only a rough assessment of financial health, and I’m sure MXR has company-specific issues impacting its capital structure decisions. I recommend you continue to research Max Resource to get a more holistic view of the stock by looking at:


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.

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