Some say volatility, reasonably than debt, is one of the simplest ways to consider threat as an investor, however Warren Buffett famously mentioned that ‘Volatility is much from synonymous with threat.’ So it appears the sensible cash is aware of that debt – which is normally concerned in bankruptcies – is a vital issue, once you assess how dangerous an organization is. We be aware that SaltX Technology Holding AB (publ) (STO:SALT B) does have debt on its stability sheet. But the extra vital query is: how a lot threat is that debt creating?

When Is Debt Dangerous?

Debt and different liabilities grow to be dangerous for a enterprise when it can not simply fulfill these obligations, both with free money stream or by elevating capital at a sexy value. Ultimately, if the corporate cannot fulfill its authorized obligations to repay debt, shareholders may stroll away with nothing. While that isn’t too widespread, we regularly do see indebted firms completely diluting shareholders as a result of lenders drive them to boost capital at a distressed value. Of course, debt might be an vital device in companies, notably capital heavy companies. The first step when contemplating an organization’s debt ranges is to think about its money and debt collectively.

See our latest analysis for SaltX Technology Holding

What Is SaltX Technology Holding’s Net Debt?

As you may see beneath, SaltX Technology Holding had kr27.0m of debt, at March 2023, which is about the identical because the yr earlier than. You can click on the chart for larger element. But it additionally has kr59.5m in money to offset that, which means it has kr32.5m web money.

A Look At SaltX Technology Holding’s Liabilities

Zooming in on the newest stability sheet information, we will see that SaltX Technology Holding had liabilities of kr17.5m due inside 12 months and liabilities of kr28.6m due past that. Offsetting these obligations, it had money of kr59.5m in addition to receivables valued at kr1.25m due inside 12 months. So it really has kr14.6m extra liquid property than whole liabilities.

This quick time period liquidity is an indication that SaltX Technology Holding may most likely repay its debt with ease, as its stability sheet is much from stretched. Simply put, the truth that SaltX Technology Holding has additional cash than debt is arguably a great indication that it will probably handle its debt safely. The stability sheet is clearly the realm to give attention to if you find yourself analysing debt. But it’s SaltX Technology Holding’s earnings that can affect how the stability sheet holds up sooner or later. So when you’re eager to find extra about its earnings, it is perhaps value trying out this graph of its long term earnings trend.

In the final yr SaltX Technology Holding had a loss earlier than curiosity and tax, and really shrunk its income by 37%, to kr8.7m. That makes us nervous, to say the least.

So How Risky Is SaltX Technology Holding?

Statistically talking firms that lose cash are riskier than those who make cash. And within the final yr SaltX Technology Holding had an earnings earlier than curiosity and tax (EBIT) loss, reality be instructed. Indeed, in that point it burnt by kr51m of money and made a lack of kr56m. However, it has web money of kr32.5m, so it has a little bit of time earlier than it is going to want extra capital. Even although its stability sheet appears sufficiently liquid, debt at all times makes us just a little nervous if an organization does not produce free money stream commonly. When analysing debt ranges, the stability sheet is the plain place to begin. However, not all funding threat resides throughout the stability sheet – removed from it. For instance SaltX Technology Holding has 3 warning signs (and 1 which is concerning) we expect you must find out about.

If you are desirous about investing in companies that may develop earnings with out the burden of debt, then take a look at this free list of growing businesses that have net cash on the balance sheet.

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