Is NANO MRNALtd (TSE:4571) Using Debt Sensibly?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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. Importantly, NANO MRNA Co.,Ltd. (TSE:4571) does carry debt. But the more important question is: how much risk is that debt creating?

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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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is NANO MRNALtd's Debt?

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 June 2025, a reduction from JP¥1.11b over a year. But on the other hand it also has JP¥3.40b in cash, leading to a JP¥2.86b net cash position.

A Look At NANO MRNALtd's Liabilities

The latest balance sheet data shows that NANO MRNALtd had liabilities of JP¥1.17b due within a year, and liabilities of JP¥108.0m falling due after that. Offsetting these obligations, it had cash of JP¥3.40b as well as receivables valued at JP¥33.0m due within 12 months. So it can boast JP¥2.15b more liquid assets than total liabilities.

This excess liquidity suggests that NANO MRNALtd is taking a careful approach to debt. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Succinctly put, NANO MRNALtd boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since NANO MRNALtd 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.

View our latest analysis for NANO MRNALtd

In the last year NANO MRNALtd wasn't profitable at an EBIT level, but managed to grow its revenue by 49%, to JP¥115m. With any luck the company will be able to grow its way to profitability.

So How Risky Is NANO MRNALtd?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year NANO MRNALtd had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through JP¥401m of cash and made a loss of JP¥879m. While this does make the company a bit risky, it's important to remember it has net cash of JP¥2.86b. That means it could keep spending at its current rate for more than two years. With very solid revenue growth in the last year, NANO MRNALtd may be on a path to profitability. Pre-profit companies are often risky, but they can also offer great rewards. 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. For example, we've discovered 3 warning signs for NANO MRNALtd (2 are a bit unpleasant!) 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.