Regenx Tech Corp. (CSE:RGX) is a company that carries debt, which raises concerns among shareholders. Debt becomes risky for a business when it cannot fulfill its obligations, whether through free cash flow or raising capital. If a company fails to repay its debt, shareholders could suffer significant losses. Even when a company manages to control its debt, it might still have to dilute its shares at a low price, which is also detrimental to shareholders.
Regenx Tech had CA$4.27 million of debt as of June 2023. However, it also had CA$343.4k in cash, resulting in a net debt of approximately CA$3.93 million. Looking at its liabilities, Regenx Tech had CA$314.6k due within 12 months and CA$4.74 million due beyond that. While it had CA$343.4k in cash and CA$16.9k in receivables due within 12 months, its liabilities still exceeded its available cash and receivables.
With a market capitalization of CA$33.5 million, the current liabilities may not pose an immediate threat. However, it is recommended for shareholders to monitor the company’s balance sheet closely in the future.
Furthermore, Regenx Tech had an earnings before interest and tax (EBIT) loss of CA$3.8 million in the last year. Along with the negative free cash flow of CA$5.7 million in the past twelve months, it indicates a risky financial situation for the company.
While analyzing debt levels, the balance sheet is crucial, but other factors must also be considered. Regenx Tech’s lack of significant operating revenue amplifies the risks associated with its debt. Shareholders should watch out for warning signs and focus on companies that are free from net debt to mitigate investment risks.
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– Debt: Money borrowed by a company that needs to be repaid, usually with interest.
– Shareholders: People or entities that own shares or stock in a company.
– Balance Sheet: A financial statement that provides information about a company’s assets, liabilities, and shareholders’ equity at a specific point in time.
– Earnings Before Interest and Tax (EBIT): A measure of a company’s profitability that excludes interest and tax expenses.