We Think BELIMO Holding (VTX:BEAN) Can Manage Its Debt With Ease

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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 BELIMO Holding AG (VTX:BEAN) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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 think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does BELIMO Holding Carry?

As you can see below, at the end of June 2025, BELIMO Holding had CHF13.7m of debt, up from CHF6.60m a year ago. Click the image for more detail. But it also has CHF75.7m in cash to offset that, meaning it has CHF62.0m net cash.

How Strong Is BELIMO Holding's Balance Sheet?

The latest balance sheet data shows that BELIMO Holding had liabilities of CHF180.7m due within a year, and liabilities of CHF31.0m falling due after that. Offsetting these obligations, it had cash of CHF75.7m as well as receivables valued at CHF170.5m due within 12 months. So it can boast CHF34.5m more liquid assets than total liabilities.

Having regard to BELIMO Holding's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the CHF9.56b company is struggling for cash, we still think it's worth monitoring its balance sheet. Succinctly put, BELIMO Holding boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for BELIMO Holding

On top of that, BELIMO Holding grew its EBIT by 34% over the last twelve months, and that growth will make it easier to handle its 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 BELIMO 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. BELIMO Holding may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last three years, BELIMO Holding 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

While it is always sensible to investigate a company's debt, in this case BELIMO Holding has CHF62.0m in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 34% over the last year. So we don't think BELIMO Holding's use of debt is risky. Over time, share prices tend to follow earnings per share, so if you're interested in BELIMO Holding, you may well want to click here to check an interactive graph of its earnings per share history.

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.

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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.