Is 3U Holding (ETR:UUU) 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.' 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, 3U Holding AG (ETR:UUU) does carry debt. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does 3U Holding Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 3U Holding had €26.0m of debt, an increase on €15.3m, over one year. However, it does have €38.6m in cash offsetting this, leading to net cash of €12.6m.

How Healthy Is 3U Holding's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that 3U Holding had liabilities of €14.1m due within 12 months and liabilities of €26.3m due beyond that. Offsetting this, it had €38.6m in cash and €5.87m in receivables that were due within 12 months. So it actually has €4.07m more liquid assets than total liabilities.

This short term liquidity is a sign that 3U Holding could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that 3U Holding has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine 3U Holding's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for 3U Holding

Over 12 months, 3U Holding reported revenue of €58m, which is a gain of 10%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is 3U Holding?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that 3U Holding had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through €18m of cash and made a loss of €657k. With only €12.6m on the balance sheet, it would appear that its going to need to raise capital again soon. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. 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 - 3U Holding has 1 warning sign we think you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.