Is Viaplay Group (STO:VPLAY B) 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. We note that Viaplay Group AB (publ) (STO:VPLAY B) does have debt on its balance sheet. But is this debt a concern to shareholders?

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

What Risk Does Debt Bring?

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. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Viaplay Group Carry?

As you can see below, Viaplay Group had kr1.88b of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. On the flip side, it has kr927.0m in cash leading to net debt of about kr949.0m.

How Strong Is Viaplay Group's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Viaplay Group had liabilities of kr8.74b due within 12 months and liabilities of kr3.99b due beyond that. On the other hand, it had cash of kr927.0m and kr1.50b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by kr10.3b.

Given this deficit is actually higher than the company's market capitalization of kr6.96b, we think shareholders really should watch Viaplay Group'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 Viaplay Group will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Viaplay Group

In the last year Viaplay Group had a loss before interest and tax, and actually shrunk its revenue by 4.0%, to kr18b. We would much prefer see growth.

Caveat Emptor

Importantly, Viaplay Group had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at kr16m. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of kr1.0b over the last twelve months. 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. Case in point: We've spotted 3 warning signs for Viaplay Group you should be aware of, and 2 of them can't be ignored.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.