Is Bragg Gaming Group (TSE:BRAG) Using Too Much Debt?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 note that Bragg Gaming Group Inc. (TSE:BRAG) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

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. 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.

What Is Bragg Gaming Group's Debt?

The image below, which you can click on for greater detail, shows that Bragg Gaming Group had debt of €1.70m at the end of June 2025, a reduction from €7.17m over a year. However, its balance sheet shows it holds €4.24m in cash, so it actually has €2.55m net cash.

A Look At Bragg Gaming Group's Liabilities

We can see from the most recent balance sheet that Bragg Gaming Group had liabilities of €30.2m falling due within a year, and liabilities of €3.89m due beyond that. Offsetting these obligations, it had cash of €4.24m as well as receivables valued at €25.0m due within 12 months. So its liabilities total €4.84m more than the combination of its cash and short-term receivables.

Of course, Bragg Gaming Group has a market capitalization of €82.1m, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Bragg Gaming Group 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 Bragg Gaming Group'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.

Check out our latest analysis for Bragg Gaming Group

In the last year Bragg Gaming Group wasn't profitable at an EBIT level, but managed to grow its revenue by 11%, to €105m. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Bragg Gaming Group?

Although Bragg Gaming Group had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of €14m. 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. Until we see some positive EBIT, we're a bit cautious of the stock, not least because of the rather modest revenue growth. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Bragg Gaming Group you should know about.

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.