Is Greenbriar Sustainable Living (CVE:GRB) Using Debt In A Risky Way?

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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Greenbriar Sustainable Living Inc. (CVE:GRB) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Greenbriar Sustainable Living Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Greenbriar Sustainable Living had CA$9.41m of debt, an increase on CA$6.35m, over one year. However, it also had CA$1.79m in cash, and so its net debt is CA$7.62m.

A Look At Greenbriar Sustainable Living's Liabilities

According to the last reported balance sheet, Greenbriar Sustainable Living had liabilities of CA$15.5m due within 12 months, and liabilities of CA$2.23m due beyond 12 months. On the other hand, it had cash of CA$1.79m and CA$6.4k worth of receivables due within a year. So it has liabilities totalling CA$15.9m more than its cash and near-term receivables, combined.

This deficit is considerable relative to its market capitalization of CA$16.0m, so it does suggest shareholders should keep an eye on Greenbriar Sustainable Living'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 you can't view debt in total isolation; since Greenbriar Sustainable Living 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 Greenbriar Sustainable Living

It seems likely shareholders hope that Greenbriar Sustainable Living can significantly advance the business plan before too long, because it doesn't have any significant revenue at the moment.

Caveat Emptor

Importantly, Greenbriar Sustainable Living had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping CA$1.8m. 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. Another cause for caution is that is bled CA$1.5m in negative free cash flow over the last twelve months. So in short it's a really risky stock. 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 4 warning signs for Greenbriar Sustainable Living (2 shouldn't be ignored!) 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.