Would Ðuro Ðakovic Grupa d.d (ZGSE:DDJH) Be Better Off With Less Debt?

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.' 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. Importantly, Ðuro Ðakovic Grupa d.d. (ZGSE:DDJH) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Ðuro Ðakovic Grupa d.d's Debt?

As you can see below, at the end of September 2025, Ðuro Ðakovic Grupa d.d had €22.6m of debt, up from €16.1m a year ago. Click the image for more detail. On the flip side, it has €893.9k in cash leading to net debt of about €21.7m.

How Healthy Is Ðuro Ðakovic Grupa d.d's Balance Sheet?

We can see from the most recent balance sheet that Ðuro Ðakovic Grupa d.d had liabilities of €51.5m falling due within a year, and liabilities of €21.5m due beyond that. On the other hand, it had cash of €893.9k and €25.4m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by €46.7m.

Since publicly traded Ðuro Ðakovic Grupa d.d shares are worth a total of €1.83b, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. But either way, Ðuro Ðakovic Grupa d.d has virtually no net debt, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is Ðuro Ðakovic Grupa d.d'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.

Check out our latest analysis for Ðuro Ðakovic Grupa d.d

Over 12 months, Ðuro Ðakovic Grupa d.d reported revenue of €133m, which is a gain of 22%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Even though Ðuro Ðakovic Grupa d.d managed to grow its top line quite deftly, the cold hard truth is that it is losing money on the EBIT line. Indeed, it lost €5.5m at the EBIT level. 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. Another cause for caution is that is bled €5.6m in negative free cash flow over the last twelve months. So suffice it to say we do consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example - Ðuro Ðakovic Grupa d.d has 2 warning signs we think you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.