Does UNIOR Kovaska industrija d.d (LJSE:UKIG) Have A Healthy Balance Sheet?

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. As with many other companies UNIOR Kovaska industrija d.d. (LJSE:UKIG) makes use of debt. But the more important question is: how much risk is that debt creating?

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

What Is UNIOR Kovaska industrija d.d's Net Debt?

As you can see below, UNIOR Kovaska industrija d.d had €101.7m of debt at June 2025, down from €114.9m a year prior. On the flip side, it has €19.7m in cash leading to net debt of about €81.9m.

A Look At UNIOR Kovaska industrija d.d's Liabilities

We can see from the most recent balance sheet that UNIOR Kovaska industrija d.d had liabilities of €157.1m falling due within a year, and liabilities of €11.2m due beyond that. Offsetting these obligations, it had cash of €19.7m as well as receivables valued at €41.8m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €106.8m.

This deficit casts a shadow over the €11.1m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, UNIOR Kovaska industrija d.d would likely require a major re-capitalisation if it had to pay its creditors today. When analysing debt levels, the balance sheet is the obvious place to start. But it is UNIOR Kovaska industrija d.d's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for UNIOR Kovaska industrija d.d

In the last year UNIOR Kovaska industrija d.d had a loss before interest and tax, and actually shrunk its revenue by 3.2%, to €234m. We would much prefer see growth.

Caveat Emptor

Over the last twelve months UNIOR Kovaska industrija d.d produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable €24m at the EBIT level. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. Like every long-shot we're sure it has a glossy presentation outlining its blue-sky potential. But the reality is that it is low on liquid assets relative to liabilities, and it lost €42m in the last year. So we're not very excited about owning this stock. Its too risky for us. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 4 warning signs with UNIOR Kovaska industrija d.d (at least 2 which are concerning) , and understanding them should be part of your investment process.

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.

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.