Does Infinities Technology International (Cayman) Holding (HKG:1961) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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 can see that Infinities Technology International (Cayman) Holding Limited (HKG:1961) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Infinities Technology International (Cayman) Holding's Debt?

As you can see below, at the end of June 2025, Infinities Technology International (Cayman) Holding had CN¥20.5m of debt, up from CN¥6.02m a year ago. Click the image for more detail. However, it also had CN¥1.47m in cash, and so its net debt is CN¥19.0m.

How Healthy Is Infinities Technology International (Cayman) Holding's Balance Sheet?

We can see from the most recent balance sheet that Infinities Technology International (Cayman) Holding had liabilities of CN¥153.4m falling due within a year, and liabilities of CN¥24.8m due beyond that. Offsetting these obligations, it had cash of CN¥1.47m as well as receivables valued at CN¥62.9m due within 12 months. So its liabilities total CN¥113.8m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Infinities Technology International (Cayman) Holding has a market capitalization of CN¥204.9m, and so it could probably strengthen its balance sheet by raising capital if it needed to. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. When analysing debt levels, the balance sheet is the obvious place to start. But it is Infinities Technology International (Cayman) Holding's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Infinities Technology International (Cayman) Holding

In the last year Infinities Technology International (Cayman) Holding had a loss before interest and tax, and actually shrunk its revenue by 44%, to CN¥144m. To be frank that doesn't bode well.

Caveat Emptor

While Infinities Technology International (Cayman) Holding's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Its EBIT loss was a whopping CN¥67m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of CN¥60m into a profit. So we do think this stock is quite risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 3 warning signs for Infinities Technology International (Cayman) Holding (1 can't be ignored!) that you should be aware of before investing here.

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.