IsoEnergy (TSE:ISO) Has Debt But No Earnings; Should You Worry?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that IsoEnergy Ltd. (TSE:ISO) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is IsoEnergy's Debt?

As you can see below, IsoEnergy had CA$16.0m of debt at June 2025, down from CA$42.2m a year prior. However, it does have CA$125.3m in cash offsetting this, leading to net cash of CA$109.4m.

How Strong Is IsoEnergy's Balance Sheet?

According to the last reported balance sheet, IsoEnergy had liabilities of CA$27.6m due within 12 months, and liabilities of CA$2.82m due beyond 12 months. On the other hand, it had cash of CA$125.3m and CA$646.4k worth of receivables due within a year. So it actually has CA$95.6m more liquid assets than total liabilities.

This short term liquidity is a sign that IsoEnergy could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that IsoEnergy 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 ultimately the future profitability of the business will decide if IsoEnergy can strengthen its balance sheet over time. 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 IsoEnergy

Since IsoEnergy doesn't have significant operating revenue, shareholders must hope it'll sell some fossil fuels, before it runs out of money.

So How Risky Is IsoEnergy?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that IsoEnergy had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through CA$35m of cash and made a loss of CA$28m. While this does make the company a bit risky, it's important to remember it has net cash of CA$109.4m. That means it could keep spending at its current rate for more than two years. 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. 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. We've identified 3 warning signs with IsoEnergy (at least 2 which are significant) , and understanding them should be part of your investment process.

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.