Health Check: How Prudently Does TransAct Technologies (NASDAQ:TACT) Use Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 TransAct Technologies Incorporated (NASDAQ:TACT) makes use of debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is TransAct Technologies's Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 TransAct Technologies had US$3.00m of debt, an increase on US$2.25m, over one year. However, its balance sheet shows it holds US$20.0m in cash, so it actually has US$17.0m net cash.

A Look At TransAct Technologies' Liabilities

According to the last reported balance sheet, TransAct Technologies had liabilities of US$12.8m due within 12 months, and liabilities of US$379.0k due beyond 12 months. Offsetting this, it had US$20.0m in cash and US$5.84m in receivables that were due within 12 months. So it actually has US$12.7m more liquid assets than total liabilities.

This surplus strongly suggests that TransAct Technologies has a rock-solid balance sheet (and the debt is of no concern whatsoever). Having regard to this fact, we think its balance sheet is as strong as an ox. Simply put, the fact that TransAct Technologies 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 it is future earnings, more than anything, that will determine TransAct Technologies'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 TransAct Technologies

In the last year TransAct Technologies wasn't profitable at an EBIT level, but managed to grow its revenue by 8.3%, to US$50m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is TransAct Technologies?

While TransAct Technologies lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow US$9.4m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. With mediocre revenue growth in the last year, we're don't find the investment opportunity particularly compelling. 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 2 warning signs for TransAct Technologies you should be aware of.

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.