Is Piippo Oyj (HEL:PIIPPO) Using Debt In A Risky Way?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Piippo Oyj (HEL:PIIPPO) does carry debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, debt can be an important tool in businesses, particularly capital heavy businesses. 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 Piippo Oyj Carry?

The image below, which you can click on for greater detail, shows that Piippo Oyj had debt of €2.78m at the end of September 2025, a reduction from €5.85m over a year. However, because it has a cash reserve of €600.3k, its net debt is less, at about €2.18m.

How Healthy Is Piippo Oyj's Balance Sheet?

According to the balance sheet data, Piippo Oyj had liabilities of €3.83m due within 12 months, but no longer term liabilities. Offsetting these obligations, it had cash of €600.3k as well as receivables valued at €1.03m due within 12 months. So it has liabilities totalling €2.20m more than its cash and near-term receivables, combined.

Given this deficit is actually higher than the company's market capitalization of €2.17m, we think shareholders really should watch Piippo Oyj's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Piippo Oyj will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Piippo Oyj

In the last year Piippo Oyj had a loss before interest and tax, and actually shrunk its revenue by 11%, to €12m. We would much prefer see growth.

Caveat Emptor

Not only did Piippo Oyj's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable €1.2m at the EBIT level. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. It's fair to say the loss of €1.5m didn't encourage us either; we'd like to see a profit. And until that time we think this is a risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Piippo Oyj (of which 2 don't sit too well with us!) you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.