Health Check: How Prudently Does FluoGuide (STO:FLUO) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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 FluoGuide A/S (STO:FLUO) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does FluoGuide Carry?

The image below, which you can click on for greater detail, shows that at March 2025 FluoGuide had debt of kr.12.0m, up from kr.10.5m in one year. However, its balance sheet shows it holds kr.21.0m in cash, so it actually has kr.8.94m net cash.

How Strong Is FluoGuide's Balance Sheet?

The latest balance sheet data shows that FluoGuide had liabilities of kr.17.3m due within a year, and liabilities of kr.610.0k falling due after that. Offsetting this, it had kr.21.0m in cash and kr.7.78m in receivables that were due within 12 months. So it can boast kr.10.8m more liquid assets than total liabilities.

This surplus suggests that FluoGuide has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, FluoGuide boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine FluoGuide's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for FluoGuide

Given its lack of meaningful operating revenue, FluoGuide shareholders no doubt hope it can fund itself until it has a profitable product.

So How Risky Is FluoGuide?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that FluoGuide had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through kr.28m of cash and made a loss of kr.30m. With only kr.8.94m on the balance sheet, it would appear that its going to need to raise capital again soon. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 3 warning signs for FluoGuide you should be aware of, and 2 of them are potentially serious.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.