We Think Nordic LEVEL Group AB (publ.) (STO:LEVEL) Has A Fair Chunk Of Debt

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 Nordic LEVEL Group AB (publ.) (STO:LEVEL) does use debt in its business. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Nordic LEVEL Group AB (publ.)'s Debt?

The image below, which you can click on for greater detail, shows that Nordic LEVEL Group AB (publ.) had debt of kr55.3m at the end of June 2025, a reduction from kr72.9m over a year. However, because it has a cash reserve of kr2.97m, its net debt is less, at about kr52.3m.

How Healthy Is Nordic LEVEL Group AB (publ.)'s Balance Sheet?

The latest balance sheet data shows that Nordic LEVEL Group AB (publ.) had liabilities of kr162.1m due within a year, and liabilities of kr23.5m falling due after that. Offsetting these obligations, it had cash of kr2.97m as well as receivables valued at kr133.2m due within 12 months. So its liabilities total kr49.4m more than the combination of its cash and short-term receivables.

Nordic LEVEL Group AB (publ.) has a market capitalization of kr119.8m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Nordic LEVEL Group AB (publ.)'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.

View our latest analysis for Nordic LEVEL Group AB (publ.)

In the last year Nordic LEVEL Group AB (publ.) wasn't profitable at an EBIT level, but managed to grow its revenue by 2.3%, to kr380m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Nordic LEVEL Group AB (publ.) had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost kr6.9m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of kr10m into a profit. In the meantime, we consider the stock very risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example Nordic LEVEL Group AB (publ.) has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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.