Does BluGlass (ASX:BLG) Have A Healthy Balance Sheet?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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, BluGlass Limited (ASX:BLG) does carry debt. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does BluGlass Carry?

The image below, which you can click on for greater detail, shows that at June 2025 BluGlass had debt of AU$3.05m, up from AU$1.15m in one year. But on the other hand it also has AU$5.74m in cash, leading to a AU$2.69m net cash position.

A Look At BluGlass' Liabilities

The latest balance sheet data shows that BluGlass had liabilities of AU$7.48m due within a year, and liabilities of AU$4.86m falling due after that. On the other hand, it had cash of AU$5.74m and AU$7.77m worth of receivables due within a year. So it actually has AU$1.17m more liquid assets than total liabilities.

This short term liquidity is a sign that BluGlass could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that BluGlass has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since BluGlass will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for BluGlass

Over 12 months, BluGlass reported revenue of AU$5.5m, which is a gain of 18%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is BluGlass?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months BluGlass lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through AU$8.0m of cash and made a loss of AU$11m. With only AU$2.69m on the balance sheet, it would appear that its going to need to raise capital again soon. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that BluGlass is showing 6 warning signs in our investment analysis , and 3 of those are a bit unpleasant...

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.