Is Comfort Gloves Berhad (KLSE:COMFORT) Weighed On By Its Debt Load?

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. Importantly, Comfort Gloves Berhad (KLSE:COMFORT) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Comfort Gloves Berhad's Net Debt?

As you can see below, Comfort Gloves Berhad had RM47.1m of debt at September 2025, down from RM58.2m a year prior. However, its balance sheet shows it holds RM170.1m in cash, so it actually has RM123.0m net cash.

How Strong Is Comfort Gloves Berhad's Balance Sheet?

According to the last reported balance sheet, Comfort Gloves Berhad had liabilities of RM80.7m due within 12 months, and liabilities of RM17.2m due beyond 12 months. Offsetting these obligations, it had cash of RM170.1m as well as receivables valued at RM146.6m due within 12 months. So it can boast RM218.8m more liquid assets than total liabilities.

This surplus strongly suggests that Comfort Gloves Berhad has a rock-solid balance sheet (and the debt is of no concern whatsoever). Having regard to this fact, we think its balance sheet is as strong as an ox. Simply put, the fact that Comfort Gloves Berhad has more cash than debt is arguably a good indication that it can manage its debt safely. 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 Comfort Gloves Berhad 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.

Check out our latest analysis for Comfort Gloves Berhad

In the last year Comfort Gloves Berhad wasn't profitable at an EBIT level, but managed to grow its revenue by 12%, to RM361m. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Comfort Gloves Berhad?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months Comfort Gloves Berhad lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through RM21m of cash and made a loss of RM99m. While this does make the company a bit risky, it's important to remember it has net cash of RM123.0m. 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. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. Be aware that Comfort Gloves Berhad is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.