Does Symphony Environmental Technologies (LON:SYM) Have A Healthy Balance Sheet?

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 seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Symphony Environmental Technologies plc (LON:SYM) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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. 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. 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 Symphony Environmental Technologies's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Symphony Environmental Technologies had UK£2.29m of debt, an increase on UK£2.05m, over one year. However, it also had UK£861.0k in cash, and so its net debt is UK£1.43m.

How Healthy Is Symphony Environmental Technologies' Balance Sheet?

According to the last reported balance sheet, Symphony Environmental Technologies had liabilities of UK£3.65m due within 12 months, and liabilities of UK£370.0k due beyond 12 months. On the other hand, it had cash of UK£861.0k and UK£2.44m worth of receivables due within a year. So its liabilities total UK£715.0k more than the combination of its cash and short-term receivables.

Since publicly traded Symphony Environmental Technologies shares are worth a total of UK£17.7m, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Symphony Environmental Technologies will need earnings to service that debt. 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 Symphony Environmental Technologies

Over 12 months, Symphony Environmental Technologies made a loss at the EBIT level, and saw its revenue drop to UK£6.1m, which is a fall of 2.2%. We would much prefer see growth.

Caveat Emptor

Importantly, Symphony Environmental Technologies had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at UK£1.0m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through UK£1.7m of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Symphony Environmental Technologies (of which 2 are potentially serious!) 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.