Health Check: How Prudently Does Beamtree Holdings (ASX:BMT) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Beamtree Holdings Limited (ASX:BMT) makes use of debt. But should shareholders be worried about its use of debt?

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Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Beamtree Holdings Carry?

The image below, which you can click on for greater detail, shows that at June 2025 Beamtree Holdings had debt of AU$2.31m, up from AU$537.0k in one year. But it also has AU$5.94m in cash to offset that, meaning it has AU$3.63m net cash.

A Look At Beamtree Holdings' Liabilities

We can see from the most recent balance sheet that Beamtree Holdings had liabilities of AU$7.81m falling due within a year, and liabilities of AU$4.55m due beyond that. Offsetting these obligations, it had cash of AU$5.94m as well as receivables valued at AU$3.66m due within 12 months. So its liabilities total AU$2.76m more than the combination of its cash and short-term receivables.

Given Beamtree Holdings has a market capitalization of AU$63.9m, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Beamtree Holdings boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Beamtree Holdings's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for Beamtree Holdings

In the last year Beamtree Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 3.6%, to AU$29m. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Beamtree Holdings?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that Beamtree Holdings had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through AU$1.8m of cash and made a loss of AU$6.2m. But the saving grace is the AU$3.63m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example - Beamtree Holdings has 2 warning signs we think you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.