Here's Why Beijing Beida Jade Bird Universal Sci-Tech (HKG:8095) Can Afford Some Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, Beijing Beida Jade Bird Universal Sci-Tech Company Limited (HKG:8095) does carry debt. But the more important question is: how much risk is that debt creating?

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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. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Beijing Beida Jade Bird Universal Sci-Tech Carry?

You can click the graphic below for the historical numbers, but it shows that Beijing Beida Jade Bird Universal Sci-Tech had CN¥907.6m of debt in June 2025, down from CN¥974.6m, one year before. On the flip side, it has CN¥184.7m in cash leading to net debt of about CN¥723.0m.

How Healthy Is Beijing Beida Jade Bird Universal Sci-Tech's Balance Sheet?

The latest balance sheet data shows that Beijing Beida Jade Bird Universal Sci-Tech had liabilities of CN¥870.9m due within a year, and liabilities of CN¥498.8m falling due after that. Offsetting these obligations, it had cash of CN¥184.7m as well as receivables valued at CN¥924.9m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by CN¥260.1m.

Since publicly traded Beijing Beida Jade Bird Universal Sci-Tech shares are worth a total of CN¥1.82b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. There's no doubt that we learn most about debt from the balance sheet. But it is Beijing Beida Jade Bird Universal Sci-Tech's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Beijing Beida Jade Bird Universal Sci-Tech

Over 12 months, Beijing Beida Jade Bird Universal Sci-Tech reported revenue of CN¥585m, which is a gain of 6.0%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Beijing Beida Jade Bird Universal Sci-Tech had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at CN¥127m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through CN¥120m 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. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 2 warning signs for Beijing Beida Jade Bird Universal Sci-Tech (1 is a bit concerning!) that you should be aware of before investing here.

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.