Does Elbit Imaging (TLV:EMITF) 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. We note that Elbit Imaging Ltd. (TLV:EMITF) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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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. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Elbit Imaging's Net Debt?

As you can see below, at the end of June 2025, Elbit Imaging had ₪213.8m of debt, up from none a year ago. Click the image for more detail. On the flip side, it has ₪29.3m in cash leading to net debt of about ₪184.6m.

A Look At Elbit Imaging's Liabilities

Zooming in on the latest balance sheet data, we can see that Elbit Imaging had liabilities of ₪233.9m due within 12 months and liabilities of ₪26.0m due beyond that. On the other hand, it had cash of ₪29.3m and ₪46.8m worth of receivables due within a year. So it has liabilities totalling ₪183.9m more than its cash and near-term receivables, combined.

This deficit casts a shadow over the ₪82.9m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Elbit Imaging would likely require a major re-capitalisation if it had to pay its creditors today. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Elbit Imaging will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Elbit Imaging

Given its lack of meaningful operating revenue, Elbit Imaging shareholders no doubt hope it can fund itself until it can sell some of its new medical technology.

Caveat Emptor

While Elbit Imaging's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. To be specific the EBIT loss came in at ₪6.6m. Considering that alongside the liabilities mentioned above make us nervous about the company. It would need to improve its operations quickly for us to be interested in it. Not least because it burned through ₪3.9m in negative free cash flow over the last year. So suffice it to say we consider the stock to be risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 4 warning signs for Elbit Imaging you should be aware of, and 1 of them can't be ignored.

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.