Is Sociedad de Inversiones Campos Chilenos (SNSE:CAMPOS) Using Too Much Debt?

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.' 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. Importantly, Sociedad de Inversiones Campos Chilenos S.A. (SNSE:CAMPOS) does carry debt. But is this debt a concern to shareholders?

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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. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Sociedad de Inversiones Campos Chilenos's Net Debt?

As you can see below, at the end of March 2025, Sociedad de Inversiones Campos Chilenos had US$2.62m of debt, up from US$2.05m a year ago. Click the image for more detail. However, it also had US$105.0k in cash, and so its net debt is US$2.51m.

How Healthy Is Sociedad de Inversiones Campos Chilenos' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Sociedad de Inversiones Campos Chilenos had liabilities of US$330.0k due within 12 months and liabilities of US$2.49m due beyond that. Offsetting this, it had US$105.0k in cash and US$271.0k in receivables that were due within 12 months. So it has liabilities totalling US$2.45m more than its cash and near-term receivables, combined.

Of course, Sociedad de Inversiones Campos Chilenos has a market capitalization of US$37.2m, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Sociedad de Inversiones Campos Chilenos 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.

Check out our latest analysis for Sociedad de Inversiones Campos Chilenos

It seems likely shareholders hope that Sociedad de Inversiones Campos Chilenos can significantly advance the business plan before too long, because it doesn't have any significant revenue at the moment.

Caveat Emptor

Importantly, Sociedad de Inversiones Campos Chilenos had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$188k. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$110k of cash over the last year. So suffice it to say we do consider the stock to be risky. 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. For example, we've discovered 4 warning signs for Sociedad de Inversiones Campos Chilenos (2 are potentially serious!) that you should be aware of before investing here.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.