Does WALLIX GROUP (EPA:ALLIX) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that WALLIX GROUP SA (EPA:ALLIX) does have debt on its balance sheet. But is this debt a concern to shareholders?

We check all companies for important risks. See what we found for WALLIX GROUP in our free report.

What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is WALLIX GROUP's Debt?

The image below, which you can click on for greater detail, shows that WALLIX GROUP had debt of €8.28m at the end of December 2024, a reduction from €8.72m over a year. However, its balance sheet shows it holds €11.2m in cash, so it actually has €2.89m net cash.

How Healthy Is WALLIX GROUP's Balance Sheet?

According to the last reported balance sheet, WALLIX GROUP had liabilities of €34.9m due within 12 months, and liabilities of €9.50m due beyond 12 months. Offsetting these obligations, it had cash of €11.2m as well as receivables valued at €19.8m due within 12 months. So its liabilities total €13.4m more than the combination of its cash and short-term receivables.

Of course, WALLIX GROUP has a market capitalization of €95.3m, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, WALLIX GROUP also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if WALLIX GROUP 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.

View our latest analysis for WALLIX GROUP

In the last year WALLIX GROUP wasn't profitable at an EBIT level, but managed to grow its revenue by 23%, to €41m. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is WALLIX GROUP?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months WALLIX GROUP lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of €5.3m and booked a €4.3m accounting loss. But at least it has €2.89m on the balance sheet to spend on growth, near-term. WALLIX GROUP's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. Pre-profit companies are often risky, but they can also offer great rewards. 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 WALLIX GROUP's profit, revenue, and operating cashflow have changed over the last few years.

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.

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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.