Health Check: How Prudently Does Silvaco Group (NASDAQ:SVCO) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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 Silvaco Group, Inc. (NASDAQ:SVCO) makes use of debt. But the real question is whether this debt is making the company risky.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Silvaco Group Carry?

You can click the graphic below for the historical numbers, but it shows that Silvaco Group had US$3.06m of debt in June 2025, down from US$4.79m, one year before. But it also has US$39.0m in cash to offset that, meaning it has US$35.9m net cash.

How Healthy Is Silvaco Group's Balance Sheet?

We can see from the most recent balance sheet that Silvaco Group had liabilities of US$38.6m falling due within a year, and liabilities of US$9.43m due beyond that. On the other hand, it had cash of US$39.0m and US$22.0m worth of receivables due within a year. So it can boast US$13.0m more liquid assets than total liabilities.

This short term liquidity is a sign that Silvaco Group could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Silvaco Group has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Silvaco Group's ability to maintain a healthy balance sheet going forward. 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 Silvaco Group

In the last year Silvaco Group had a loss before interest and tax, and actually shrunk its revenue by 5.7%, to US$55m. We would much prefer see growth.

So How Risky Is Silvaco Group?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Silvaco Group had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through US$28m of cash and made a loss of US$31m. But at least it has US$35.9m on the balance sheet to spend on growth, near-term. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Silvaco Group that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.