Health Check: How Prudently Does CleanSpace Holdings (ASX:CSX) Use Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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. Importantly, CleanSpace Holdings Limited (ASX:CSX) does carry debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. 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 CleanSpace Holdings Carry?

As you can see below, CleanSpace Holdings had AU$2.83m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has AU$10.5m in cash, leading to a AU$7.64m net cash position.

A Look At CleanSpace Holdings' Liabilities

According to the last reported balance sheet, CleanSpace Holdings had liabilities of AU$3.62m due within 12 months, and liabilities of AU$4.80m due beyond 12 months. Offsetting these obligations, it had cash of AU$10.5m as well as receivables valued at AU$5.27m due within 12 months. So it can boast AU$7.33m more liquid assets than total liabilities.

This surplus suggests that CleanSpace Holdings has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that CleanSpace Holdings has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine CleanSpace Holdings's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for CleanSpace Holdings

In the last year CleanSpace Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 26%, to AU$20m. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is CleanSpace Holdings?

While CleanSpace Holdings lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow AU$1.0m. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. Keeping in mind its 26% revenue growth over the last year, we think there's a decent chance the company is on track. There's no doubt fast top line growth can cure all manner of ills, for a stock. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. Be aware that CleanSpace Holdings is showing 1 warning sign in our investment analysis , you should know about...

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.