Does Integrated System Credit Consulting Fintech (BIT:ISC) Have A 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.' 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 can see that Integrated System Credit Consulting Fintech S.p.A. (BIT:ISC) does use debt in its business. But is this debt a concern to shareholders?

When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

View our latest analysis for Integrated System Credit Consulting Fintech

What Is Integrated System Credit Consulting Fintech's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of December 2023 Integrated System Credit Consulting Fintech had €4.61m of debt, an increase on €1.35m, over one year. However, because it has a cash reserve of €1.97m, its net debt is less, at about €2.64m.

A Look At Integrated System Credit Consulting Fintech's Liabilities

The latest balance sheet data shows that Integrated System Credit Consulting Fintech had liabilities of €1.79m due within a year, and liabilities of €5.28m falling due after that. Offsetting these obligations, it had cash of €1.97m as well as receivables valued at €8.17m due within 12 months. So it can boast €3.07m more liquid assets than total liabilities.

This surplus suggests that Integrated System Credit Consulting Fintech has a conservative balance sheet, and could probably eliminate its debt without much difficulty. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Integrated System Credit Consulting Fintech's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

It seems likely shareholders hope that Integrated System Credit Consulting Fintech can significantly advance the business plan before too long, because it doesn't have any significant revenue at the moment.

Caveat Emptor

While Integrated System Credit Consulting Fintech's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost a very considerable €3.4m at the EBIT level. On a more positive note, the company does have liquid assets, so it has a bit of time to improve its operations before the debt becomes an acute problem. Still, we'd be more encouraged to study the business in depth if it already had some free cash flow. So it seems too risky for our taste. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 5 warning signs for Integrated System Credit Consulting Fintech (2 shouldn't be ignored!) 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com