Does QuickLogic (NASDAQ:QUIK) Have A Healthy Balance Sheet?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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. Importantly, QuickLogic Corporation (NASDAQ:QUIK) does carry debt. 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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is QuickLogic's Net Debt?

The image below, which you can click on for greater detail, shows that QuickLogic had debt of US$17.6m at the end of March 2025, a reduction from US$21.4m over a year. However, because it has a cash reserve of US$17.5m, its net debt is less, at about US$72.0k.

How Strong Is QuickLogic's Balance Sheet?

The latest balance sheet data shows that QuickLogic had liabilities of US$21.5m due within a year, and liabilities of US$1.28m falling due after that. On the other hand, it had cash of US$17.5m and US$5.72m worth of receivables due within a year. So it can boast US$505.0k more liquid assets than total liabilities.

Having regard to QuickLogic's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the US$98.0m company is short on cash, but still worth keeping an eye on the balance sheet. But either way, QuickLogic has virtually no net debt, 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 it is future earnings, more than anything, that will determine QuickLogic'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.

View our latest analysis for QuickLogic

In the last year QuickLogic had a loss before interest and tax, and actually shrunk its revenue by 17%, to US$19m. We would much prefer see growth.

Caveat Emptor

Not only did QuickLogic's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost US$5.5m at the EBIT level. 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. This one is a bit too risky for our liking. 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. For example, we've discovered 1 warning sign for QuickLogic that you should be aware of before investing here.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.