Is HomeToGo (ETR:HTG) 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. We note that HomeToGo SE (ETR:HTG) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

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. 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. 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.

How Much Debt Does HomeToGo Carry?

The image below, which you can click on for greater detail, shows that at September 2025 HomeToGo had debt of €71.9m, up from €2.66m in one year. But it also has €117.5m in cash to offset that, meaning it has €45.6m net cash.

A Look At HomeToGo's Liabilities

According to the last reported balance sheet, HomeToGo had liabilities of €183.8m due within 12 months, and liabilities of €161.8m due beyond 12 months. Offsetting these obligations, it had cash of €117.5m as well as receivables valued at €48.0m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €180.0m.

This is a mountain of leverage relative to its market capitalization of €239.6m. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. Despite its noteworthy liabilities, HomeToGo boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine HomeToGo'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.

View our latest analysis for HomeToGo

Over 12 months, HomeToGo reported revenue of €237m, which is a gain of 18%, 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 HomeToGo?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months HomeToGo lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of €28m and booked a €32m accounting loss. But the saving grace is the €45.6m on the balance sheet. That means it could keep spending at its current rate for more than two years. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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 example, we've discovered 1 warning sign for HomeToGo that you should be aware of before investing here.

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.