Understanding the Risk-Debt Relationship: QPR Software Oyj

When assessing the risk of an investment, legendary fund manager Li Lu once highlighted the importance of evaluating whether there is a potential permanent loss of capital rather than focusing solely on price volatility. The same principle applies when examining a company’s balance sheet, as debt can significantly impact the risk profile of a business.

In the case of QPR Software Oyj (HEL:QPR1V), debt does play a role in its financial structure. However, the key question is how much risk this debt creates. While debt can be a useful tool for businesses seeking capital for growth, it can also become a burden if the company struggles to meet its financial obligations.

A closer look at QPR Software Oyj’s financials reveals that as of December 2023, the company had €1.50 million in debt, similar to the previous year. However, when factoring in its cash reserve of €884.0k, its net debt reduces to around €616.0k. This indicates that the company has some liquidity to mitigate its debt burden.

Analyzing QPR Software Oyj’s liabilities further, we find that it had €4.33 million due within a year and €1.19 million due after that. On the other hand, the company had €884.0k in cash and €1.71 million in receivables due within 12 months. While its liabilities exceed its cash and receivables by €2.93 million, the company’s market capitalization of €7.17 million suggests it could potentially raise funds to improve its balance sheet.

Looking beyond the balance sheet, it is essential to consider future earnings as a determining factor for QPR Software Oyj’s ability to maintain a healthy financial position. With a loss before interest and tax in the last year and a shrinking revenue, there are concerns about the company’s profitability and growth prospects.

Ultimately, while the balance sheet provides valuable insights into a company’s debt situation, it is crucial to recognize that risks can also exist outside of this measure. In the case of QPR Software Oyj, it is essential to consider warning signs and thoroughly evaluate the company’s overall financial health before making any investment decisions.

Please note that this article should not be considered as financial advice. Its purpose is to provide general information based on historical data and analysis. Factors such as the latest company announcements and qualitative material may not be accounted for, and individual circumstances should be taken into consideration.

FAQ Section:

1. What is the importance of evaluating potential permanent loss of capital in an investment?
Evaluating potential permanent loss of capital is important because it helps assess the risk associated with an investment. It focuses on the long-term impact on capital rather than just price volatility.

2. How does debt impact the risk profile of a company?
Debt can significantly impact the risk profile of a company. While it can be a useful tool for business growth, it can become a burden if the company struggles to meet its financial obligations.

3. What is QPR Software Oyj’s debt situation?
As of December 2023, QPR Software Oyj had €1.50 million in debt. However, when considering its cash reserve of €884.0k, its net debt reduces to around €616.0k.

4. What are QPR Software Oyj’s liabilities and assets?
QPR Software Oyj had €4.33 million due within a year and €1.19 million due after that. It also had €884.0k in cash and €1.71 million in receivables due within 12 months.

5. Can QPR Software Oyj potentially raise funds to improve its balance sheet?
Yes, QPR Software Oyj’s market capitalization of €7.17 million suggests that it could potentially raise funds to improve its balance sheet.

6. Are there concerns about QPR Software Oyj’s profitability and growth prospects?
Yes, there are concerns about QPR Software Oyj’s profitability and growth prospects as it has experienced a loss before interest and tax in the last year and a shrinking revenue.

7. What should be considered before making investment decisions?
Before making investment decisions, it is important to consider warning signs and thoroughly evaluate the overall financial health of the company. The balance sheet is valuable but risks can also exist outside of this measure.

Definitions:
Capital: The financial assets or resources available for investment and production.
Debt: Money owed by an individual or organization to another party.
Liquidity: The ability of an asset or a business to be converted into cash quickly without significant loss of value.
Liabilities: The financial obligations or debts owed by a company.
Receivables: Money owed to a company by its customers for goods or services provided on credit.

Suggested Related Links:
QPR Software Official Website