Here's Why BHB Brauholding Bayern-Mitte (FRA:B9B) Can Afford Some Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 can see that BHB Brauholding Bayern-Mitte AG (FRA:B9B) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

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. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is BHB Brauholding Bayern-Mitte's Net Debt?

As you can see below, BHB Brauholding Bayern-Mitte had €4.32m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, because it has a cash reserve of €183.5k, its net debt is less, at about €4.13m.

A Look At BHB Brauholding Bayern-Mitte's Liabilities

The latest balance sheet data shows that BHB Brauholding Bayern-Mitte had liabilities of €2.95m due within a year, and liabilities of €3.99m falling due after that. On the other hand, it had cash of €183.5k and €2.19m worth of receivables due within a year. So its liabilities total €4.57m more than the combination of its cash and short-term receivables.

This deficit isn't so bad because BHB Brauholding Bayern-Mitte is worth €7.63m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if BHB Brauholding Bayern-Mitte can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for BHB Brauholding Bayern-Mitte

In the last year BHB Brauholding Bayern-Mitte's revenue was pretty flat, and it made a negative EBIT. While that hardly impresses, its not too bad either.

Caveat Emptor

Over the last twelve months BHB Brauholding Bayern-Mitte produced an earnings before interest and tax (EBIT) loss. To be specific the EBIT loss came in at €277k. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of €311k into a profit. So we do think this stock is quite 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. Be aware that BHB Brauholding Bayern-Mitte is showing 3 warning signs in our investment analysis , and 1 of those is 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.