Here's Why We're Not Too Worried About Creotech Instruments' (WSE:CRI) Cash Burn Situation

We can readily understand why investors are attracted to unprofitable companies. For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So should Creotech Instruments (WSE:CRI) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.

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Does Creotech Instruments Have A Long Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. When Creotech Instruments last reported its March 2025 balance sheet in May 2025, it had zero debt and cash worth zł106m. Importantly, its cash burn was zł8.3m over the trailing twelve months. So it had a very long cash runway of many years from March 2025. Even though this is but one measure of the company's cash burn, the thought of such a long cash runway warms our bellies in a comforting way. You can see how its cash balance has changed over time in the image below.

Check out our latest analysis for Creotech Instruments

How Well Is Creotech Instruments Growing?

One thing for shareholders to keep front in mind is that Creotech Instruments increased its cash burn by 294% in the last twelve months. But the silver lining is that operating revenue increased by 39% in that time. Taken together, we think these growth metrics are a little worrying. In reality, this article only makes a short study of the company's growth data. This graph of historic revenue growth shows how Creotech Instruments is building its business over time.

How Hard Would It Be For Creotech Instruments To Raise More Cash For Growth?

While Creotech Instruments seems to be in a fairly good position, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Companies can raise capital through either debt or equity. Commonly, a business will sell new shares in itself to raise cash and drive growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Creotech Instruments' cash burn of zł8.3m is about 1.1% of its zł733m market capitalisation. So it could almost certainly just borrow a little to fund another year's growth, or else easily raise the cash by issuing a few shares.

So, Should We Worry About Creotech Instruments' Cash Burn?

As you can probably tell by now, we're not too worried about Creotech Instruments' cash burn. For example, we think its cash runway suggests that the company is on a good path. Although we do find its increasing cash burn to be a bit of a negative, once we consider the other metrics mentioned in this article together, the overall picture is one we are comfortable with. Looking at all the measures in this article, together, we're not worried about its rate of cash burn; the company seems well on top of its medium-term spending needs. Taking an in-depth view of risks, we've identified 1 warning sign for Creotech Instruments that you should be aware of before investing.

Of course Creotech Instruments may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.