Does Helium Evolution (CVE:HEVI) Have A Healthy Balance Sheet?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, ‘The possibility of permanent loss is the risk I worry about… and every practical investor I know worries about.’ 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. We can see that Helium Evolution Incorporated (CVE:HEVI) does use debt in its business. But the real question is whether this debt is making the company risky.

Trump has pledged to “unleash” American oil and gas and these 15 US stocks have developments that are poised to benefit.

When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company’s use of debt, we first look at cash and debt together.

How Much Debt Does Helium Evolution Carry?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Helium Evolution had CA$8.36m of debt, an increase on none, over one year. But on the other hand it also has CA$8.66m in cash, leading to a CA$298.0k net cash position.

How Healthy Is Helium Evolution’s Balance Sheet?

According to the last reported balance sheet, Helium Evolution had liabilities of CA$9.74m due within 12 months, and liabilities of CA$549.0k due beyond 12 months. Offsetting this, it had CA$8.66m in cash and CA$69.0k in receivables that were due within 12 months. So it has liabilities totalling CA$1.56m more than its cash and near-term receivables, combined.

Since publicly traded Helium Evolution shares are worth a total of CA$21.2m, it seems unlikely that this level of liabilities would be a major threat. Having said that, it’s clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Helium Evolution boasts net cash, so it’s fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But you can’t view debt in total isolation; since Helium Evolution 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.

View our latest analysis for Helium Evolution

It seems likely shareholders hope that Helium Evolution can significantly advance the business plan before too long, because it doesn’t have any significant revenue at the moment.

So How Risky Is Helium Evolution?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Helium Evolution lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of CA$9.6m and booked a CA$3.3m accounting loss. Given it only has net cash of CA$298.0k, the company may need to raise more capital if it doesn’t reach break-even soon. Summing up, we’re a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. Be aware that Helium Evolution is showing 4 warning signs in our investment analysis , and 3 of those are concerning…

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.