Dalekovod d.d (ZGSE:DLKV) Has A Pretty Healthy Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 can see that Dalekovod d.d. (ZGSE:DLKV) does use debt in its business. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Dalekovod d.d Carry?

The image below, which you can click on for greater detail, shows that Dalekovod d.d had debt of €1.75m at the end of June 2025, a reduction from €4.02m over a year. However, it does have €13.5m in cash offsetting this, leading to net cash of €11.8m.

How Strong Is Dalekovod d.d's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Dalekovod d.d had liabilities of €87.4m due within 12 months and liabilities of €14.1m due beyond that. Offsetting this, it had €13.5m in cash and €99.2m in receivables that were due within 12 months. So it actually has €11.1m more liquid assets than total liabilities.

This short term liquidity is a sign that Dalekovod d.d could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Dalekovod d.d has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Dalekovod d.d

Also good is that Dalekovod d.d grew its EBIT at 14% over the last year, further increasing its ability to manage debt. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Dalekovod d.d 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Dalekovod d.d has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. In the last three years, Dalekovod d.d created free cash flow amounting to 15% of its EBIT, an uninspiring performance. That limp level of cash conversion undermines its ability to manage and pay down debt.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Dalekovod d.d has net cash of €11.8m, as well as more liquid assets than liabilities. And it also grew its EBIT by 14% over the last year. So we don't have any problem with Dalekovod d.d's use of debt. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of Dalekovod d.d's earnings per share history for free.

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.