Is Carbios SAS (EPA:ALCRB) Using Debt Sensibly?

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. Importantly, Carbios SAS (EPA:ALCRB) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Carbios SAS Carry?

As you can see below, Carbios SAS had €40.3m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, its balance sheet shows it holds €71.7m in cash, so it actually has €31.4m net cash.

How Strong Is Carbios SAS' Balance Sheet?

According to the last reported balance sheet, Carbios SAS had liabilities of €23.1m due within 12 months, and liabilities of €42.4m due beyond 12 months. Offsetting these obligations, it had cash of €71.7m as well as receivables valued at €448.0k due within 12 months. So it can boast €6.62m more liquid assets than total liabilities.

This surplus suggests that Carbios SAS has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Carbios SAS boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Carbios SAS 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.

Check out our latest analysis for Carbios SAS

It seems likely shareholders hope that Carbios SAS can significantly advance the business plan before too long, because it doesn't have any significant revenue at the moment.

So How Risky Is Carbios SAS?

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 Carbios SAS lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through €65m of cash and made a loss of €39m. But at least it has €31.4m on the balance sheet to spend on growth, near-term. Importantly, Carbios SAS's revenue growth is hot to trot. High growth pre-profit companies may well be risky, but they can also offer great rewards. 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. For example Carbios SAS has 4 warning signs (and 3 which are potentially serious) we think you should know about.

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.