Is Krispy Kreme (NASDAQ:DNUT) Using Debt Sensibly?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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 Krispy Kreme, Inc. (NASDAQ:DNUT) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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

What Is Krispy Kreme's Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Krispy Kreme had US$898.9m of debt, an increase on US$811.2m, over one year. On the flip side, it has US$30.7m in cash leading to net debt of about US$868.2m.

A Look At Krispy Kreme's Liabilities

Zooming in on the latest balance sheet data, we can see that Krispy Kreme had liabilities of US$448.9m due within 12 months and liabilities of US$1.46b due beyond that. Offsetting this, it had US$30.7m in cash and US$73.5m in receivables that were due within 12 months. So it has liabilities totalling US$1.80b more than its cash and near-term receivables, combined.

This deficit casts a shadow over the US$738.3m company, like a colossus towering over mere mortals. So we definitely think shareholders need to watch this one closely. After all, Krispy Kreme would likely require a major re-capitalisation if it had to pay its creditors today. 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 Krispy Kreme 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.

View our latest analysis for Krispy Kreme

In the last year Krispy Kreme had a loss before interest and tax, and actually shrunk its revenue by 10%, to US$1.5b. We would much prefer see growth.

Caveat Emptor

While Krispy Kreme's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost a very considerable US$75m at the EBIT level. Considering that alongside the liabilities mentioned above make us nervous about the company. It would need to improve its operations quickly for us to be interested in it. Not least because it had negative free cash flow of US$99m over the last twelve months. That means it's on the risky side of things. 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. Case in point: We've spotted 2 warning signs for Krispy Kreme you should be aware of.

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.

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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.