Yunhong Green CTI (NASDAQ:YHGJ) Is Carrying A Fair Bit Of Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Yunhong Green CTI Ltd. (NASDAQ:YHGJ) does use debt in its business. But is this debt a concern to shareholders?

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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 get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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. When we think about a company's use of debt, we first look at cash and debt together.

What Is Yunhong Green CTI's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Yunhong Green CTI had US$5.46m of debt, an increase on US$5.03m, over one year. However, it does have US$387.0k in cash offsetting this, leading to net debt of about US$5.08m.

How Strong Is Yunhong Green CTI's Balance Sheet?

According to the last reported balance sheet, Yunhong Green CTI had liabilities of US$8.24m due within 12 months, and liabilities of US$3.39m due beyond 12 months. Offsetting this, it had US$387.0k in cash and US$2.69m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$8.55m.

This deficit is considerable relative to its market capitalization of US$12.1m, so it does suggest shareholders should keep an eye on Yunhong Green CTI's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. There's no doubt that we learn most about debt from the balance sheet. But it is Yunhong Green CTI'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 trend.

View our latest analysis for Yunhong Green CTI

In the last year Yunhong Green CTI wasn't profitable at an EBIT level, but managed to grow its revenue by 4.4%, to US$19m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Yunhong Green CTI had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$240k. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of US$902k into a profit. So we do think this stock is quite risky. 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. Case in point: We've spotted 2 warning signs for Yunhong Green CTI you should be aware of, and 1 of them is 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.

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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.