Is dynaCERT (TSE:DYA) Using Too Much Debt?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that dynaCERT Inc. (TSE:DYA) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. 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 dynaCERT Carry?

As you can see below, at the end of September 2025, dynaCERT had CA$2.16m of debt, up from CA$454.3k a year ago. Click the image for more detail. However, its balance sheet shows it holds CA$2.19m in cash, so it actually has CA$36.1k net cash.

How Healthy Is dynaCERT's Balance Sheet?

According to the last reported balance sheet, dynaCERT had liabilities of CA$4.77m due within 12 months, and liabilities of CA$4.7k due beyond 12 months. Offsetting these obligations, it had cash of CA$2.19m as well as receivables valued at CA$557.7k due within 12 months. So it has liabilities totalling CA$2.03m more than its cash and near-term receivables, combined.

Since publicly traded dynaCERT shares are worth a total of CA$55.9m, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, dynaCERT also has more cash than debt, so we're pretty confident 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 dynaCERT'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.

Check out our latest analysis for dynaCERT

Over 12 months, dynaCERT made a loss at the EBIT level, and saw its revenue drop to CA$765k, which is a fall of 48%. To be frank that doesn't bode well.

So How Risky Is dynaCERT?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months dynaCERT lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of CA$9.9m and booked a CA$10m accounting loss. Given it only has net cash of CA$36.1k, the company may need to raise more capital if it doesn't reach break-even soon. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. For example, we've discovered 4 warning signs for dynaCERT (2 are a bit unpleasant!) that you should be aware of before investing here.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.