Health Check: How Prudently Does Greiffenberger (FRA:GRF) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. As with many other companies Greiffenberger AG (FRA:GRF) makes use of debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Greiffenberger's Debt?

As you can see below, Greiffenberger had €2.59m of debt at June 2025, down from €12.2m a year prior. However, because it has a cash reserve of €1.25m, its net debt is less, at about €1.34m.

How Healthy Is Greiffenberger's Balance Sheet?

We can see from the most recent balance sheet that Greiffenberger had liabilities of €16.7m falling due within a year, and liabilities of €14.3m due beyond that. Offsetting these obligations, it had cash of €1.25m as well as receivables valued at €10.2m due within 12 months. So its liabilities total €19.6m more than the combination of its cash and short-term receivables.

The deficiency here weighs heavily on the €2.63m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. At the end of the day, Greiffenberger would probably need a major re-capitalization if its creditors were to demand repayment. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Greiffenberger'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 Greiffenberger

In the last year Greiffenberger had a loss before interest and tax, and actually shrunk its revenue by 2.7%, to €61m. That's not what we would hope to see.

Caveat Emptor

Over the last twelve months Greiffenberger produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping €5.6m. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. Sure, the company might have a nice story about how they are going on to a brighter future. But the reality is that it is low on liquid assets relative to liabilities, and it lost €8.7m in the last year. So we're not very excited about owning this stock. Its too risky for us. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 3 warning signs with Greiffenberger , and understanding them should be part of your investment process.

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.