Euroapi (EPA:EAPI) Has Debt But No Earnings; Should You Worry?

Warren Buffett famously said, '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. As with many other companies Euroapi S.A. (EPA:EAPI) makes use of debt. But is this debt a concern to shareholders?

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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. 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, plenty of companies use debt to fund growth, without any negative consequences. 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 Euroapi Carry?

You can click the graphic below for the historical numbers, but it shows that Euroapi had €50.5m of debt in June 2025, down from €452.8m, one year before. But it also has €51.5m in cash to offset that, meaning it has €1.00m net cash.

How Healthy Is Euroapi's Balance Sheet?

We can see from the most recent balance sheet that Euroapi had liabilities of €311.0m falling due within a year, and liabilities of €177.5m due beyond that. On the other hand, it had cash of €51.5m and €179.5m worth of receivables due within a year. So its liabilities total €257.5m more than the combination of its cash and short-term receivables.

This deficit is considerable relative to its market capitalization of €316.9m, so it does suggest shareholders should keep an eye on Euroapi's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. Despite its noteworthy liabilities, Euroapi 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 Euroapi'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.

See our latest analysis for Euroapi

In the last year Euroapi had a loss before interest and tax, and actually shrunk its revenue by 9.1%, to €883m. We would much prefer see growth.

So How Risky Is Euroapi?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months Euroapi lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of €7.3m and booked a €124m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of €1.00m. 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. When we look at a riskier company, we like to check how their profits (or losses) are trending over time. Today, we're providing readers this interactive graph showing how Euroapi's profit, revenue, and operating cashflow have changed over the last few years.

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.