Does Aktiebolaget Fastator (STO:FASTAT) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, '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. As with many other companies Aktiebolaget Fastator (publ) (STO:FASTAT) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Aktiebolaget Fastator's Debt?

The image below, which you can click on for greater detail, shows that at September 2025 Aktiebolaget Fastator had debt of kr2.37b, up from kr2.18b in one year. Net debt is about the same, since the it doesn't have much cash.

How Healthy Is Aktiebolaget Fastator's Balance Sheet?

According to the last reported balance sheet, Aktiebolaget Fastator had liabilities of kr2.55b due within 12 months, and liabilities of kr80.7m due beyond 12 months. Offsetting these obligations, it had cash of kr33.3m as well as receivables valued at kr52.2m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by kr2.55b.

The deficiency here weighs heavily on the kr57.0m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we'd watch its balance sheet closely, without a doubt. After all, Aktiebolaget Fastator would likely require a major re-capitalisation if it had to pay its creditors today. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Aktiebolaget Fastator will need earnings to service that debt. 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 Aktiebolaget Fastator

Over 12 months, Aktiebolaget Fastator made a loss at the EBIT level, and saw its revenue drop to kr246m, which is a fall of 37%. To be frank that doesn't bode well.

Caveat Emptor

While Aktiebolaget Fastator's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost kr4.1m at the EBIT level. When you combine this with the very significant balance sheet liabilities mentioned above, we are so wary of it that we are basically at a loss for the right words. Sure, the company might have a nice story about how they are going on to a brighter future. But the fact is that it incinerated kr734k of cash in the last twelve months, and has precious few liquid assets in comparison to its liabilities. So is this a high risk stock? We think so, and we'd avoid it. 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. We've identified 3 warning signs with Aktiebolaget Fastator , and understanding them should be part of your investment process.

Of course, if you're the type of investor who prefers buying 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 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.