Is Feintool International Holding (VTX:FTON) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. As with many other companies Feintool International Holding AG (VTX:FTON) 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?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Feintool International Holding's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Feintool International Holding had CHF132.3m of debt, an increase on CHF107.9m, over one year. On the flip side, it has CHF52.1m in cash leading to net debt of about CHF80.1m.

A Look At Feintool International Holding's Liabilities

Zooming in on the latest balance sheet data, we can see that Feintool International Holding had liabilities of CHF184.1m due within 12 months and liabilities of CHF158.3m due beyond that. Offsetting these obligations, it had cash of CHF52.1m as well as receivables valued at CHF107.1m due within 12 months. So its liabilities total CHF183.3m more than the combination of its cash and short-term receivables.

When you consider that this deficiency exceeds the company's CHF136.9m market capitalization, you might well be inclined to review the balance sheet intently. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. 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 Feintool International Holding can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Feintool International Holding

In the last year Feintool International Holding had a loss before interest and tax, and actually shrunk its revenue by 16%, to CHF664m. We would much prefer see growth.

Caveat Emptor

Not only did Feintool International Holding'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 CHF42m. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. It's fair to say the loss of CHF47m didn't encourage us either; we'd like to see a profit. In the meantime, we consider the stock to be risky. For riskier companies like Feintool International Holding I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

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.