NeoVolta (NASDAQ:NEOV) Is Making Moderate Use Of Debt

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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies NeoVolta Inc. (NASDAQ:NEOV) makes use of debt. But the more important question is: how much risk is that debt creating?

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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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does NeoVolta Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 NeoVolta had US$1.80m of debt, an increase on none, over one year. However, because it has a cash reserve of US$536.0k, its net debt is less, at about US$1.27m.

A Look At NeoVolta's Liabilities

According to the last reported balance sheet, NeoVolta had liabilities of US$1.50m due within 12 months, and liabilities of US$383.5k due beyond 12 months. Offsetting these obligations, it had cash of US$536.0k as well as receivables valued at US$2.36m due within 12 months. So it can boast US$1.01m more liquid assets than total liabilities.

Having regard to NeoVolta's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the US$102.4m company is short on cash, but still worth keeping an eye on the balance sheet. But either way, NeoVolta has virtually no net debt, 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 NeoVolta'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 NeoVolta

In the last year NeoVolta wasn't profitable at an EBIT level, but managed to grow its revenue by 53%, to US$4.3m. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Even though NeoVolta managed to grow its top line quite deftly, the cold hard truth is that it is losing money on the EBIT line. To be specific the EBIT loss came in at US$4.0m. Looking on the brighter side, the business has adequate liquid assets, which give it time to grow and develop before its debt becomes a near-term issue. Still, we'd be more encouraged to study the business in depth if it already had some free cash flow. So it seems too risky for our taste. 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 3 warning signs with NeoVolta (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

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.

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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.