We Think Edge Total Intelligence (CVE:CTRL) Has A Fair Chunk Of Debt

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.' 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. We can see that Edge Total Intelligence Inc. (CVE:CTRL) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. 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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Edge Total Intelligence's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Edge Total Intelligence had US$3.30m of debt in March 2025, down from US$4.57m, one year before. On the flip side, it has US$2.19m in cash leading to net debt of about US$1.12m.

A Look At Edge Total Intelligence's Liabilities

We can see from the most recent balance sheet that Edge Total Intelligence had liabilities of US$3.07m falling due within a year, and liabilities of US$2.26m due beyond that. On the other hand, it had cash of US$2.19m and US$253.4k worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$2.89m.

Of course, Edge Total Intelligence has a market capitalization of US$31.2m, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Edge Total Intelligence's earnings that will influence how the balance sheet holds up in the future. 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 Edge Total Intelligence

Over 12 months, Edge Total Intelligence made a loss at the EBIT level, and saw its revenue drop to US$3.0m, which is a fall of 18%. That's not what we would hope to see.

Caveat Emptor

Not only did Edge Total Intelligence's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Its EBIT loss was a whopping US$3.3m. 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. Another cause for caution is that is bled US$4.0m in negative free cash flow over the last twelve months. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 5 warning signs for Edge Total Intelligence (3 are concerning) you should be aware of.

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.