Shanghai MicroPort MedBot (Group) (HKG:2252) Has Debt But No Earnings; Should You Worry?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Shanghai MicroPort MedBot (Group) Co., Ltd. (HKG:2252) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Shanghai MicroPort MedBot (Group)'s Debt?

As you can see below, at the end of June 2025, Shanghai MicroPort MedBot (Group) had CN¥633.0m of debt, up from CN¥432.5m a year ago. Click the image for more detail. But on the other hand it also has CN¥815.8m in cash, leading to a CN¥182.8m net cash position.

A Look At Shanghai MicroPort MedBot (Group)'s Liabilities

According to the last reported balance sheet, Shanghai MicroPort MedBot (Group) had liabilities of CN¥658.5m due within 12 months, and liabilities of CN¥327.4m due beyond 12 months. On the other hand, it had cash of CN¥815.8m and CN¥137.8m worth of receivables due within a year. So its liabilities total CN¥32.4m more than the combination of its cash and short-term receivables.

This state of affairs indicates that Shanghai MicroPort MedBot (Group)'s balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the CN¥24.5b company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, Shanghai MicroPort MedBot (Group) boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Shanghai MicroPort MedBot (Group) can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Shanghai MicroPort MedBot (Group)

Over 12 months, Shanghai MicroPort MedBot (Group) reported revenue of CN¥334m, which is a gain of 114%, although it did not report any earnings before interest and tax. So there's no doubt that shareholders are cheering for growth

So How Risky Is Shanghai MicroPort MedBot (Group)?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Shanghai MicroPort MedBot (Group) had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of CN¥340m and booked a CN¥479m accounting loss. But at least it has CN¥182.8m on the balance sheet to spend on growth, near-term. The good news for shareholders is that Shanghai MicroPort MedBot (Group) has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. For riskier companies like Shanghai MicroPort MedBot (Group) I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.