Does Q-linea (STO:QLINEA) Have A Healthy Balance Sheet?

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 note that Q-linea AB (publ) (STO:QLINEA) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Q-linea Carry?

As you can see below, Q-linea had kr40.5m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has kr82.7m in cash to offset that, meaning it has kr42.2m net cash.

A Look At Q-linea's Liabilities

Zooming in on the latest balance sheet data, we can see that Q-linea had liabilities of kr27.6m due within 12 months and liabilities of kr43.9m due beyond that. Offsetting these obligations, it had cash of kr82.7m as well as receivables valued at kr38.0m due within 12 months. So it can boast kr49.2m more liquid assets than total liabilities.

This short term liquidity is a sign that Q-linea could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Q-linea boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Q-linea 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.

Check out our latest analysis for Q-linea

In the last year Q-linea wasn't profitable at an EBIT level, but managed to grow its revenue by 72%, to kr9.5m. With any luck the company will be able to grow its way to profitability.

So How Risky Is Q-linea?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that Q-linea had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of kr179m and booked a kr184m accounting loss. With only kr42.2m on the balance sheet, it would appear that its going to need to raise capital again soon. With very solid revenue growth in the last year, Q-linea may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Q-linea is showing 6 warning signs in our investment analysis , and 3 of those are potentially serious...

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.