Here's Why Nordic Technology Group (OB:NTG) Can Afford Some Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Nordic Technology Group AS (OB:NTG) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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 think about a company's use of debt, we first look at cash and debt together.

What Is Nordic Technology Group's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 Nordic Technology Group had debt of kr75.8m, up from kr46.3m in one year. On the flip side, it has kr4.44m in cash leading to net debt of about kr71.3m.

How Healthy Is Nordic Technology Group's Balance Sheet?

We can see from the most recent balance sheet that Nordic Technology Group had liabilities of kr84.6m falling due within a year, and liabilities of kr52.5m due beyond that. Offsetting these obligations, it had cash of kr4.44m as well as receivables valued at kr18.8m due within 12 months. So it has liabilities totalling kr113.8m more than its cash and near-term receivables, combined.

This is a mountain of leverage relative to its market capitalization of kr156.8m. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. When analysing debt levels, the balance sheet is the obvious place to start. But it is Nordic Technology Group's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

See our latest analysis for Nordic Technology Group

In the last year Nordic Technology Group wasn't profitable at an EBIT level, but managed to grow its revenue by 19%, to kr46m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Nordic Technology Group had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable kr187m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of kr309m. So we do think this stock is quite risky. 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. To that end, you should learn about the 5 warning signs we've spotted with Nordic Technology Group (including 3 which shouldn't be ignored) .

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.