Is NANO MRNALtd (TSE:4571) A Risky Investment?

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 might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies NANO MRNA Co.,Ltd. (TSE:4571) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does NANO MRNALtd Carry?

The image below, which you can click on for greater detail, shows that NANO MRNALtd had debt of JP¥540.0m at the end of March 2025, a reduction from JP¥1.11b over a year. However, it does have JP¥3.51b in cash offsetting this, leading to net cash of JP¥2.97b.

How Healthy Is NANO MRNALtd's Balance Sheet?

The latest balance sheet data shows that NANO MRNALtd had liabilities of JP¥1.20b due within a year, and liabilities of JP¥54.0m falling due after that. On the other hand, it had cash of JP¥3.51b and JP¥33.0m worth of receivables due within a year. So it can boast JP¥2.28b more liquid assets than total liabilities.

It's good to see that NANO MRNALtd has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Succinctly put, NANO MRNALtd boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But it is NANO MRNALtd'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.

See our latest analysis for NANO MRNALtd

Over 12 months, NANO MRNALtd made a loss at the EBIT level, and saw its revenue drop to JP¥108m, which is a fall of 20%. That's not what we would hope to see.

So How Risky Is NANO MRNALtd?

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 NANO MRNALtd had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of JP¥401m and booked a JP¥835m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of JP¥2.97b. That means it could keep spending at its current rate for more than two years. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. 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 NANO MRNALtd has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.

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.