Would Aker BioMarine (OB:AKBM) Be Better Off With Less Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Aker BioMarine ASA (OB:AKBM) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Aker BioMarine Carry?

As you can see below, Aker BioMarine had US$183.1m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, it also had US$19.5m in cash, and so its net debt is US$163.6m.

How Healthy Is Aker BioMarine's Balance Sheet?

We can see from the most recent balance sheet that Aker BioMarine had liabilities of US$74.1m falling due within a year, and liabilities of US$163.3m due beyond that. Offsetting this, it had US$19.5m in cash and US$53.1m in receivables that were due within 12 months. So its liabilities total US$164.8m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Aker BioMarine has a market capitalization of US$741.5m, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Aker BioMarine can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for Aker BioMarine

Over 12 months, Aker BioMarine reported revenue of US$207m, which is a gain of 4.0%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Over the last twelve months Aker BioMarine produced an earnings before interest and tax (EBIT) loss. To be specific the EBIT loss came in at US$2.1m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$15m of cash over the last year. So to be blunt we think it is risky. For riskier companies like Aker BioMarine I always like to keep an eye on whether insiders are buying or selling. So click here if you want to find out for yourself.

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.