Is Ecoslops (EPA:ALESA) Using Debt Sensibly?

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.' 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. As with many other companies Ecoslops S.A. (EPA:ALESA) makes use of debt. But the more important question is: how much risk is that debt creating?

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Why Does Debt Bring Risk?

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. 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, 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 think about a company's use of debt, we first look at cash and debt together.

What Is Ecoslops's Debt?

You can click the graphic below for the historical numbers, but it shows that Ecoslops had €16.4m of debt in June 2025, down from €19.1m, one year before. On the flip side, it has €5.30m in cash leading to net debt of about €11.1m.

How Strong Is Ecoslops' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Ecoslops had liabilities of €2.41m due within 12 months and liabilities of €17.4m due beyond that. Offsetting this, it had €5.30m in cash and €1.64m in receivables that were due within 12 months. So its liabilities total €12.9m more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the €3.58m company, like a colossus towering over mere mortals. So we definitely think shareholders need to watch this one closely. After all, Ecoslops would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Ecoslops'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.

View our latest analysis for Ecoslops

In the last year Ecoslops wasn't profitable at an EBIT level, but managed to grow its revenue by 4.4%, to €11m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Over the last twelve months Ecoslops produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable €1.4m at the EBIT level. If you consider the significant liabilities mentioned above, we are extremely wary of this investment. That said, it is possible that the company will turn its fortunes around. But we think that is unlikely since it is low on liquid assets, and made a loss of €3.1m in the last year. So while it's not wise to assume the company will fail, we do think it's risky. 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. We've identified 2 warning signs with Ecoslops , and understanding them should be part of your investment process.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.