Breville Group (ASX:BRG) Has A Rock Solid Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Breville Group Limited (ASX:BRG) makes use of debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Breville Group's Debt?

The image below, which you can click on for greater detail, shows that Breville Group had debt of AU$57.3m at the end of June 2025, a reduction from AU$84.2m over a year. However, it does have AU$105.7m in cash offsetting this, leading to net cash of AU$48.5m.

How Strong Is Breville Group's Balance Sheet?

The latest balance sheet data shows that Breville Group had liabilities of AU$386.6m due within a year, and liabilities of AU$120.9m falling due after that. Offsetting this, it had AU$105.7m in cash and AU$281.6m in receivables that were due within 12 months. So it has liabilities totalling AU$120.2m more than its cash and near-term receivables, combined.

Of course, Breville Group has a market capitalization of AU$4.52b, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Breville Group boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Breville Group

Also good is that Breville Group grew its EBIT at 13% over the last year, further increasing its ability to manage debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Breville Group can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Breville Group has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last three years, Breville Group produced sturdy free cash flow equating to 62% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

We could understand if investors are concerned about Breville Group's liabilities, but we can be reassured by the fact it has has net cash of AU$48.5m. So is Breville Group's debt a risk? It doesn't seem so to us. Another factor that would give us confidence in Breville Group would be if insiders have been buying shares: if you're conscious of that signal too, you can find out instantly by clicking this link.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.