IBC Advanced Alloys (CVE:IB) Has Debt But No Earnings; Should You Worry?

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.' 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. Importantly, IBC Advanced Alloys Corp. (CVE:IB) does carry debt. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is IBC Advanced Alloys's Debt?

As you can see below, at the end of June 2025, IBC Advanced Alloys had US$13.7m of debt, up from US$13.0m a year ago. Click the image for more detail. However, because it has a cash reserve of US$619.0k, its net debt is less, at about US$13.0m.

How Strong Is IBC Advanced Alloys' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that IBC Advanced Alloys had liabilities of US$14.1m due within 12 months and liabilities of US$4.35m due beyond that. Offsetting this, it had US$619.0k in cash and US$2.23m in receivables that were due within 12 months. So its liabilities total US$15.6m more than the combination of its cash and short-term receivables.

This is a mountain of leverage relative to its market capitalization of US$17.6m. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since IBC Advanced Alloys will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

See our latest analysis for IBC Advanced Alloys

In the last year IBC Advanced Alloys had a loss before interest and tax, and actually shrunk its revenue by 31%, to US$18m. To be frank that doesn't bode well.

Caveat Emptor

Not only did IBC Advanced Alloys's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at US$331k. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. For example, we would not want to see a repeat of last year's loss of US$2.2m. So we do think this stock is quite risky. 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. For example, we've discovered 2 warning signs for IBC Advanced Alloys (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.