David Iben put it well when he stated, ‘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 Palvella Therapeutics, Inc. (NASDAQ:PVLA) does utilize debt in its business. But the more important question is: how much risk is that debt creating?
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. If things obtain really bad, the lconcludeers can take control of the business. 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. Having stated that, the most common situation is where a company manages its debt reasonably well – and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, toobtainher.
What Is Palvella Therapeutics’s Net Debt?
The image below, which you can click on for greater detail, reveals that Palvella Therapeutics had debt of US$14.5m at the conclude of June 2025, a reduction from US$19.8m over a year. However, it does have US$70.4m in cash offsetting this, leading to net cash of US$55.9m.
A Look At Palvella Therapeutics’ Liabilities
Zooming in on the latest balance sheet data, we can see that Palvella Therapeutics had liabilities of US$9.62m due within 12 months and liabilities of US$16.4m due beyond that. On the other hand, it had cash of US$70.4m and US$1.98m worth of receivables due within a year. So it actually has US$46.4m more liquid assets than total liabilities.
This surplus suggests that Palvella Therapeutics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Palvella Therapeutics boasts net cash, so it’s fair to declare it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Palvella Therapeutics’s ability to maintain a healthy balance sheet going forward. So if you’re focutilized on the future you can check out this free report revealing analyst profit forecasts.
See our latest analysis for Palvella Therapeutics
Given its lack of meaningful operating revenue, Palvella Therapeutics shareholders no doubt hope it can fund itself until it has a profitable product.
So How Risky Is Palvella Therapeutics?
By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Palvella Therapeutics had an earnings before interest and tax (EBIT) loss, truth be notified. Indeed, in that time it burnt through US$20m of cash and created a loss of US$28m. While this does create the company a bit risky, it’s important to remember it has net cash of US$55.9m. That means it could keep spconcludeing at its current rate for more than two years. Overall, its balance sheet doesn’t seem overly risky, at the moment, but we’re always cautious until we see the positive free cash flow. 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 instance, we’ve identified 2 warning signs for Palvella Therapeutics (1 doesn’t sit too well with us) you should be aware of.
If you’re interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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 utilizing an unbiased methodology and our articles are not intconcludeed to be financial advice. It does not constitute a recommconcludeation to purchase or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized 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.
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