Is INFICON Holding (VTX:IFCN) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that INFICON Holding AG (VTX:IFCN) does use debt in its business. But is this debt a concern to shareholders?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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 step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does INFICON Holding Carry?

As you can see below, at the end of June 2025, INFICON Holding had US$103.2m of debt, up from US$84.4m a year ago. Click the image for more detail. However, it does have US$141.7m in cash offsetting this, leading to net cash of US$38.5m.

How Healthy Is INFICON Holding's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that INFICON Holding had liabilities of US$192.6m due within 12 months and liabilities of US$11.7m due beyond that. Offsetting these obligations, it had cash of US$141.7m as well as receivables valued at US$91.2m due within 12 months. So it can boast US$28.6m more liquid assets than total liabilities.

This state of affairs indicates that INFICON Holding's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the US$2.99b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that INFICON Holding has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for INFICON Holding

But the other side of the story is that INFICON Holding saw its EBIT decline by 6.4% over the last year. That sort of decline, if sustained, will obviously make debt harder to handle. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine INFICON Holding's ability to maintain a healthy balance sheet going forward. 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. While INFICON Holding 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. Over the most recent three years, INFICON Holding recorded free cash flow worth 57% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that INFICON Holding has net cash of US$38.5m, as well as more liquid assets than liabilities. So we are not troubled with INFICON Holding's debt use. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of INFICON Holding's earnings per share history for free.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.