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Health Check: How Prudently Does Fica Empreendimentos Imobiliarios (BVMF:FIEI3) Use Debt?

Simply Wall St · 1d ago

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Fica Empreendimentos Imobiliarios S.A (BVMF:FIEI3) makes use of debt. But the more important question is: how much risk is that debt creating?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. 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 step when considering a company's debt levels is to consider its cash and debt together.

What Is Fica Empreendimentos Imobiliarios's Net Debt?

As you can see below, at the end of September 2025, Fica Empreendimentos Imobiliarios had R$23.2m of debt, up from R$9.50m a year ago. Click the image for more detail. On the flip side, it has R$7.38m in cash leading to net debt of about R$15.8m.

debt-equity-history-analysis
BOVESPA:FIEI3 Debt to Equity History December 29th 2025

How Strong Is Fica Empreendimentos Imobiliarios' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Fica Empreendimentos Imobiliarios had liabilities of R$18.0m due within 12 months and liabilities of R$23.2m due beyond that. On the other hand, it had cash of R$7.38m and R$781.0k worth of receivables due within a year. So it has liabilities totalling R$33.0m more than its cash and near-term receivables, combined.

When you consider that this deficiency exceeds the company's R$32.4m market capitalization, you might well be inclined to review the balance sheet intently. Hypothetically, extremely heavy dilution would be required if the company were forced to pay down its liabilities by raising capital at the current share price. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Fica Empreendimentos Imobiliarios will need earnings to service that debt. 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.

See our latest analysis for Fica Empreendimentos Imobiliarios

Over 12 months, Fica Empreendimentos Imobiliarios made a loss at the EBIT level, and saw its revenue drop to R$1.3m, which is a fall of 13%. We would much prefer see growth.

Caveat Emptor

Not only did Fica Empreendimentos Imobiliarios's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Its EBIT loss was a whopping R$4.9m. When we look at that alongside the significant liabilities, we're not particularly confident about the company. It would need to improve its operations quickly for us to be interested in it. Not least because it had negative free cash flow of R$4.1m over the last twelve months. That means it's on the risky side of things. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For example - Fica Empreendimentos Imobiliarios has 3 warning signs we think 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.