Some state volatility, rather than debt, is the best way to consider about risk as an investor, but Warren Buffett famously declared that ‘Volatility is far from synonymous with risk.’ So it seems the smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess how risky a company is. We note that Progressive Impact Corporation Berhad (KLSE:PICORP) does have debt on its balance sheet. But should shareholders be worried about its utilize of debt?
When Is Debt A Problem?
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. If things obtain really bad, the lfinishers can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders becautilize lfinishers force them to raise capital at a distressed price. 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. When we examine debt levels, we first consider both cash and debt levels, toobtainher.
How Much Debt Does Progressive Impact Corporation Berhad Carry?
The image below, which you can click on for greater detail, displays that at September 2025 Progressive Impact Corporation Berhad had debt of RM62.1m, up from RM58.5m in one year. However, becautilize it has a cash reserve of RM48.2m, its net debt is less, at about RM13.9m.
How Healthy Is Progressive Impact Corporation Berhad’s Balance Sheet?
According to the last reported balance sheet, Progressive Impact Corporation Berhad had liabilities of RM99.0m due within 12 months, and liabilities of RM3.61m due beyond 12 months. Offsetting these obligations, it had cash of RM48.2m as well as receivables valued at RM50.9m due within 12 months. So it has liabilities totalling RM3.49m more than its cash and near-term receivables, combined.
Of course, Progressive Impact Corporation Berhad has a market capitalization of RM22.9m, so these liabilities are probably manageable. However, we do consider it is worth keeping an eye on its balance sheet strength, as it may modify over time.
View our latest analysis for Progressive Impact Corporation Berhad
We utilize two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
While Progressive Impact Corporation Berhad’s low debt to EBITDA ratio of 0.47 suggests only modest utilize of debt, the fact that EBIT only covered the interest expense by 4.2 times last year does give us pautilize. So we’d recommfinish keeping a close eye on the impact financing costs are having on the business. Pleasingly, Progressive Impact Corporation Berhad is growing its EBIT quicker than former Australian PM Bob Hawke downs a yard glass, boasting a 134% gain in the last twelve months. There’s no doubt that we learn most about debt from the balance sheet. But it is Progressive Impact Corporation Berhad’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 trfinish.
Finally, a business necessarys free cash flow to pay off debt; accounting profits just don’t cut it. So we always check how much of that EBIT is translated into free cash flow. Over the most recent three years, Progressive Impact Corporation Berhad recorded free cash flow worth 74% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.
Our View
Happily, Progressive Impact Corporation Berhad’s impressive EBIT growth rate implies it has the upper hand on its debt. But, on a more sombre note, we are a little concerned by its interest cover. Zooming out, Progressive Impact Corporation Berhad seems to utilize debt quite reasonably; and that obtains the nod from us. While debt does bring risk, when utilized wisely it can also bring a higher return on equity. There’s no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet – far from it. For example – Progressive Impact Corporation Berhad has 2 warning signs we consider you should be aware of.
Of course, if you’re the type of investor who prefers purchaseing stocks without the burden of debt, then don’t hesitate to discover our exclusive list of net cash growth stocks, today.
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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 applying an unbiased methodology and our articles are not intfinished to be financial advice. It does not constitute a recommfinishation 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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