Slantse Stara Zagora Tabac AD (BUL:SUN) Is In A Good Position To Deliver On Growth Plans

We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

So, the natural question for Slantse Stara Zagora Tabac AD (BUL:SUN) shareholders is whether they should be concerned by its rate of cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. Let's start with an examination of the business' cash, relative to its cash burn.

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How Long Is Slantse Stara Zagora Tabac AD's Cash Runway?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. When Slantse Stara Zagora Tabac AD last reported its September 2025 balance sheet in November 2025, it had zero debt and cash worth лв2.1m. In the last year, its cash burn was лв1.2m. Therefore, from September 2025 it had roughly 21 months of cash runway. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. The image below shows how its cash balance has been changing over the last few years.

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How Is Slantse Stara Zagora Tabac AD's Cash Burn Changing Over Time?

In our view, Slantse Stara Zagora Tabac AD doesn't yet produce significant amounts of operating revenue, since it reported just лв52k in the last twelve months. As a result, we think it's a bit early to focus on the revenue growth, so we'll limit ourselves to looking at how the cash burn is changing over time. In fact, it ramped its spending strongly over the last year, increasing cash burn by 140%. It's fair to say that sort of rate of increase cannot be maintained for very long, without putting pressure on the balance sheet. Slantse Stara Zagora Tabac AD makes us a little nervous due to its lack of substantial operating revenue. We prefer most of the stocks on this list of stocks that analysts expect to grow.

Can Slantse Stara Zagora Tabac AD Raise More Cash Easily?

Given its cash burn trajectory, Slantse Stara Zagora Tabac AD shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

Slantse Stara Zagora Tabac AD's cash burn of лв1.2m is about 2.2% of its лв55m market capitalisation. That means it could easily issue a few shares to fund more growth, and might well be in a position to borrow cheaply.

How Risky Is Slantse Stara Zagora Tabac AD's Cash Burn Situation?

Even though its increasing cash burn makes us a little nervous, we are compelled to mention that we thought Slantse Stara Zagora Tabac AD's cash burn relative to its market cap was relatively promising. While we're the kind of investors who are always a bit concerned about the risks involved with cash burning companies, the metrics we have discussed in this article leave us relatively comfortable about Slantse Stara Zagora Tabac AD's situation. On another note, we conducted an in-depth investigation of the company, and identified 4 warning signs for Slantse Stara Zagora Tabac AD (3 are a bit unpleasant!) that you should be aware of before investing here.

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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.