Health Check: How Prudently Does Admicasa Holding (BRN:ADMI) Use Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 Admicasa Holding AG (BRN:ADMI) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, 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 Admicasa Holding's Debt?

The image below, which you can click on for greater detail, shows that Admicasa Holding had debt of CHF2.25m at the end of June 2025, a reduction from CHF2.70m over a year. However, it does have CHF4.15m in cash offsetting this, leading to net cash of CHF1.90m.

How Healthy Is Admicasa Holding's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Admicasa Holding had liabilities of CHF8.22m due within 12 months and liabilities of CHF1.37m due beyond that. Offsetting these obligations, it had cash of CHF4.15m as well as receivables valued at CHF5.52m due within 12 months. So its total liabilities are just about perfectly matched by its shorter-term, liquid assets.

This state of affairs indicates that Admicasa Holding's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the CHF17.5m company is short on cash, but still worth keeping an eye on the balance sheet. Succinctly put, Admicasa Holding boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Admicasa Holding 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 Admicasa Holding

Given it has no significant operating revenue at the moment, shareholders will be hoping Admicasa Holding can make progress and gain better traction for the business, before it runs low on cash.

So How Risky Is Admicasa Holding?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that Admicasa Holding had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through CHF1.3m of cash and made a loss of CHF510k. But the saving grace is the CHF1.90m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. 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. Case in point: We've spotted 3 warning signs for Admicasa Holding you should be aware of, and 2 of them are a bit unpleasant.

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.