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.’ When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, Constellation Software Inc. (TSE:CSU) does carry debt. But the more important question is: how much risk is that debt creating?

When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with

Brokerage firm IDBI Capital is bullish on software and consulting company Sonata Software on the back of strong financial performance over the past few quarters under the leadership of new chief executive officer (CEO), Samir Dhir. It sees over 19 per cent more upside in the stock, despite the shares giving 163 per cent returns in a year.

As per the brokerage, Sonata Software’s alliances with technology leaders such as Microsoft, Oracle, and IBM; and involvement in several early adoption partnerships provide the company with an early-mover advantage on newer technology and releases.

Not just that, as per the brokerage,