Does Nimbus Group (STO:BOAT) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Nimbus Group AB (Publ) (STO:BOAT) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Nimbus Group Carry?

The image below, which you can click on for greater detail, shows that Nimbus Group had debt of kr22.4m at the end of September 2025, a reduction from kr191.1m over a year. But it also has kr48.2m in cash to offset that, meaning it has kr25.8m net cash.

A Look At Nimbus Group's Liabilities

Zooming in on the latest balance sheet data, we can see that Nimbus Group had liabilities of kr640.2m due within 12 months and liabilities of kr165.5m due beyond that. Offsetting these obligations, it had cash of kr48.2m as well as receivables valued at kr449.8m due within 12 months. So it has liabilities totalling kr307.7m more than its cash and near-term receivables, combined.

This is a mountain of leverage relative to its market capitalization of kr483.9m. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. While it does have liabilities worth noting, Nimbus Group also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Nimbus Group's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for Nimbus Group

Over 12 months, Nimbus Group made a loss at the EBIT level, and saw its revenue drop to kr1.4b, which is a fall of 18%. That's not what we would hope to see.

So How Risky Is Nimbus Group?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months Nimbus Group lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through kr109m of cash and made a loss of kr105m. Given it only has net cash of kr25.8m, the company may need to raise more capital if it doesn't reach break-even soon. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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 2 warning signs for Nimbus Group (1 is a bit unpleasant) 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.