Is Aevis Victoria (VTX:AEVS) Using Debt Sensibly?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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. We note that Aevis Victoria SA (VTX:AEVS) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Aevis Victoria's Debt?

The image below, which you can click on for greater detail, shows that Aevis Victoria had debt of CHF956.8m at the end of June 2025, a reduction from CHF999.9m over a year. However, because it has a cash reserve of CHF23.5m, its net debt is less, at about CHF933.3m.

How Strong Is Aevis Victoria's Balance Sheet?

According to the last reported balance sheet, Aevis Victoria had liabilities of CHF437.4m due within 12 months, and liabilities of CHF902.6m due beyond 12 months. Offsetting these obligations, it had cash of CHF23.5m as well as receivables valued at CHF287.4m due within 12 months. So its liabilities total CHF1.03b more than the combination of its cash and short-term receivables.

This deficit is considerable relative to its market capitalization of CHF1.09b, so it does suggest shareholders should keep an eye on Aevis Victoria's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Aevis Victoria will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Aevis Victoria

In the last year Aevis Victoria wasn't profitable at an EBIT level, but managed to grow its revenue by 10%, to CHF956m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Over the last twelve months Aevis Victoria produced an earnings before interest and tax (EBIT) loss. To be specific the EBIT loss came in at CHF28m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Surprisingly, we note that it actually reported positive free cash flow of CHF5.5m and a profit of CHF2.1m. So one might argue that there's still a chance it can get things on the right track. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Aevis Victoria is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

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.