Is Perma-Fix Environmental Services (NASDAQ:PESI) Using Too Much 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.' 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 can see that Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

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. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

What Is Perma-Fix Environmental Services's Net Debt?

As you can see below, Perma-Fix Environmental Services had US$1.89m of debt at September 2025, down from US$2.46m a year prior. But on the other hand it also has US$16.4m in cash, leading to a US$14.5m net cash position.

A Look At Perma-Fix Environmental Services' Liabilities

Zooming in on the latest balance sheet data, we can see that Perma-Fix Environmental Services had liabilities of US$23.9m due within 12 months and liabilities of US$11.9m due beyond that. Offsetting this, it had US$16.4m in cash and US$20.3m in receivables that were due within 12 months. So it can boast US$902.0k more liquid assets than total liabilities.

Having regard to Perma-Fix Environmental Services' size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the US$258.9m company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that Perma-Fix Environmental Services has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Perma-Fix Environmental Services can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Perma-Fix Environmental Services

In the last year Perma-Fix Environmental Services had a loss before interest and tax, and actually shrunk its revenue by 9.6%, to US$61m. That's not what we would hope to see.

So How Risky Is Perma-Fix Environmental Services?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Perma-Fix Environmental Services had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of US$16m and booked a US$11m accounting loss. But at least it has US$14.5m on the balance sheet to spend on growth, near-term. 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. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 2 warning signs with Perma-Fix Environmental Services , and understanding them should be part of your investment process.

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.