Health Check: How Prudently Does BoardWare Intelligence Technology (HKG:1204) Use Debt?

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.' 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 BoardWare Intelligence Technology Limited (HKG:1204) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is BoardWare Intelligence Technology's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 BoardWare Intelligence Technology had debt of HK$44.2m, up from HK$35.5m in one year. But on the other hand it also has HK$99.7m in cash, leading to a HK$55.5m net cash position.

How Healthy Is BoardWare Intelligence Technology's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that BoardWare Intelligence Technology had liabilities of HK$260.9m due within 12 months and liabilities of HK$17.6m due beyond that. On the other hand, it had cash of HK$99.7m and HK$324.4m worth of receivables due within a year. So it actually has HK$145.6m more liquid assets than total liabilities.

This surplus suggests that BoardWare Intelligence Technology has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, BoardWare Intelligence Technology 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 it is BoardWare Intelligence Technology's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for BoardWare Intelligence Technology

Over 12 months, BoardWare Intelligence Technology saw its revenue hold pretty steady, and it did not report positive earnings before interest and tax. While that's not too bad, we'd prefer see growth.

So How Risky Is BoardWare Intelligence Technology?

While BoardWare Intelligence Technology lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of HK$699k. So taking that on face value, and considering the cash, we don't think its very risky in the near term. We'll feel more comfortable with the stock once EBIT is positive, given the lacklustre revenue growth. 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. Case in point: We've spotted 2 warning signs for BoardWare Intelligence Technology you should be aware of, and 1 of them can't be ignored.

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.