Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Infinity Natural Resources, Inc. (NYSE:INR) does use debt in its business. But the more important question is: how much risk is that debt creating?

What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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.

How Much Debt Does Infinity Natural Resources Carry?

The image below, which you can click on for greater detail, shows that Infinity Natural Resources had debt of US$75.4m at the end of September 2025, a reduction from US$224.9m over a year. On the flip side, it has US$4.57m in cash leading to net debt of about US$70.8m.

How Strong Is Infinity Natural Resources' Balance Sheet?

According to the last reported balance sheet, Infinity Natural Resources had liabilities of US$128.7m due within 12 months, and liabilities of US$86.8m due beyond 12 months. Offsetting these obligations, it had cash of US$4.57m as well as receivables valued at US$49.8m due within 12 months. So its liabilities total US$161.1m more than the combination of its cash and short-term receivables.

This deficit isn't so bad because Infinity Natural Resources is worth US$710.4m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Infinity Natural Resources can strengthen its balance sheet over time.

Over 12 months, Infinity Natural Resources reported revenue of US$308m, which is a gain of 18%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Infinity Natural Resources had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$12m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$124m of cash over the last year. So in short it's a really risky stock. When I consider a company to be a bit risky, I think it is responsible to check out whether insiders have been reporting any share sales. Luckily, you can click here ito see our graphic depicting Infinity Natural Resources insider transactions.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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.