Is Atlas Lithium (NASDAQ:ATLX) A Risky Investment?

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.' 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. We note that Atlas Lithium Corporation (NASDAQ:ATLX) does have debt on its balance sheet. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Atlas Lithium Carry?

The chart below, which you can click on for greater detail, shows that Atlas Lithium had US$10.1m in debt in March 2025; about the same as the year before. But it also has US$14.0m in cash to offset that, meaning it has US$3.92m net cash.

How Healthy Is Atlas Lithium's Balance Sheet?

We can see from the most recent balance sheet that Atlas Lithium had liabilities of US$6.30m falling due within a year, and liabilities of US$30.2m due beyond that. Offsetting these obligations, it had cash of US$14.0m as well as receivables valued at US$84.8k due within 12 months. So it has liabilities totalling US$22.4m more than its cash and near-term receivables, combined.

This deficit isn't so bad because Atlas Lithium is worth US$95.3m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. Despite its noteworthy liabilities, Atlas Lithium boasts net cash, so it's fair to say it does not have a heavy debt load! 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 Atlas Lithium can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Atlas Lithium

In the last year Atlas Lithium wasn't profitable at an EBIT level, but managed to grow its revenue by 214%, to US$587k. When it comes to revenue growth, that's like nailing the game winning 3-pointer!

So How Risky Is Atlas Lithium?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year Atlas Lithium had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$43m of cash and made a loss of US$38m. Given it only has net cash of US$3.92m, the company may need to raise more capital if it doesn't reach break-even soon. The good news for shareholders is that Atlas Lithium has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 6 warning signs for Atlas Lithium you should be aware of, and 2 of them are concerning.

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.