Is T&T Proenergy (WSE:TNT) A Risky Investment?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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, T&T Proenergy S.A. (WSE:TNT) does carry debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is T&T Proenergy's Debt?

You can click the graphic below for the historical numbers, but it shows that T&T Proenergy had zł6.86m of debt in September 2025, down from zł8.14m, one year before. However, because it has a cash reserve of zł1.23m, its net debt is less, at about zł5.63m.

How Healthy Is T&T Proenergy's Balance Sheet?

The latest balance sheet data shows that T&T Proenergy had liabilities of zł16.8m due within a year, and liabilities of zł6.28m falling due after that. Offsetting these obligations, it had cash of zł1.23m as well as receivables valued at zł2.38m due within 12 months. So its liabilities total zł19.4m more than the combination of its cash and short-term receivables.

Given this deficit is actually higher than the company's market capitalization of zł13.8m, we think shareholders really should watch T&T Proenergy's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. 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 T&T Proenergy will need earnings to service that debt. 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.

Check out our latest analysis for T&T Proenergy

In the last year T&T Proenergy had a loss before interest and tax, and actually shrunk its revenue by 81%, to zł2.1m. To be frank that doesn't bode well.

Caveat Emptor

Not only did T&T Proenergy's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Its EBIT loss was a whopping zł1.7m. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it burned through zł559k in negative free cash flow over the last year. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 4 warning signs for T&T Proenergy that you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.