Glacier Media (TSE:GVC) 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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Glacier Media Inc. (TSE:GVC) does carry debt. But the real question is whether this debt is making the company risky.

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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 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, 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Glacier Media Carry?

The image below, which you can click on for greater detail, shows that Glacier Media had debt of CA$6.71m at the end of March 2025, a reduction from CA$7.06m over a year. However, it does have CA$6.94m in cash offsetting this, leading to net cash of CA$232.0k.

A Look At Glacier Media's Liabilities

The latest balance sheet data shows that Glacier Media had liabilities of CA$45.9m due within a year, and liabilities of CA$61.8m falling due after that. Offsetting these obligations, it had cash of CA$6.94m as well as receivables valued at CA$24.1m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CA$76.7m.

The deficiency here weighs heavily on the CA$19.7m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we'd watch its balance sheet closely, without a doubt. After all, Glacier Media would likely require a major re-capitalisation if it had to pay its creditors today. Given that Glacier Media has more cash than debt, we're pretty confident it can handle its debt, despite the fact that it has a lot of liabilities in total. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Glacier Media will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Glacier Media

Over 12 months, Glacier Media made a loss at the EBIT level, and saw its revenue drop to CA$140m, which is a fall of 7.2%. We would much prefer see growth.

So How Risky Is Glacier Media?

While Glacier Media lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow CA$1.7m. 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. Given the lack of transparency around future revenue (and cashflow), we're nervous about this one, until it makes its first big sales. To us, it is a high risk play. 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. We've identified 2 warning signs with Glacier Media (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.