Is Balkancar ZARYA (BUL:BZR) Using Debt In A Risky Way?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says '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. We note that Balkancar ZARYA Plc (BUL:BZR) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Balkancar ZARYA's Debt?

As you can see below, at the end of September 2025, Balkancar ZARYA had лв9.58m of debt, up from лв8.44m a year ago. Click the image for more detail. And it doesn't have much cash, so its net debt is about the same.

How Strong Is Balkancar ZARYA's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Balkancar ZARYA had liabilities of лв3.65m due within 12 months and liabilities of лв8.51m due beyond that. Offsetting this, it had лв75.0k in cash and лв2.08m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by лв10.0m.

Given this deficit is actually higher than the company's market capitalization of лв7.02m, we think shareholders really should watch Balkancar ZARYA's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Balkancar ZARYA 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.

Check out our latest analysis for Balkancar ZARYA

In the last year Balkancar ZARYA had a loss before interest and tax, and actually shrunk its revenue by 34%, to лв9.8m. To be frank that doesn't bode well.

Caveat Emptor

Not only did Balkancar ZARYA's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Its EBIT loss was a whopping лв1.3m. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of лв1.7m over the last twelve months. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 4 warning signs with Balkancar ZARYA , 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.