Nanalysis Scientific (CVE:NSCI) Is Carrying A Fair Bit Of Debt

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.' 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. As with many other companies Nanalysis Scientific Corp. (CVE:NSCI) makes use of debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Nanalysis Scientific Carry?

As you can see below, at the end of June 2025, Nanalysis Scientific had CA$15.8m of debt, up from CA$14.7m a year ago. Click the image for more detail. However, because it has a cash reserve of CA$344.0k, its net debt is less, at about CA$15.5m.

A Look At Nanalysis Scientific's Liabilities

The latest balance sheet data shows that Nanalysis Scientific had liabilities of CA$17.3m due within a year, and liabilities of CA$7.67m falling due after that. Offsetting these obligations, it had cash of CA$344.0k as well as receivables valued at CA$8.74m due within 12 months. So its liabilities total CA$15.8m more than the combination of its cash and short-term receivables.

This deficit is considerable relative to its market capitalization of CA$21.8m, so it does suggest shareholders should keep an eye on Nanalysis Scientific's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Nanalysis Scientific can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Nanalysis Scientific

In the last year Nanalysis Scientific wasn't profitable at an EBIT level, but managed to grow its revenue by 9.0%, to CA$43m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Nanalysis Scientific had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping CA$3.6m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of CA$13m into a profit. So we do think this stock is quite risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 2 warning signs for Nanalysis Scientific (1 is a bit concerning!) 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.