Is Métropole Télévision (EPA:MMT) Using Too Much Debt?

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. Importantly, Métropole Télévision S.A. (EPA:MMT) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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 frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Métropole Télévision Carry?

As you can see below, Métropole Télévision had €82.2m of debt at June 2025, down from €127.2m a year prior. However, its balance sheet shows it holds €179.2m in cash, so it actually has €97.0m net cash.

How Strong Is Métropole Télévision's Balance Sheet?

The latest balance sheet data shows that Métropole Télévision had liabilities of €472.2m due within a year, and liabilities of €169.0m falling due after that. Offsetting this, it had €179.2m in cash and €281.5m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €180.5m.

Given Métropole Télévision has a market capitalization of €1.47b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, Métropole Télévision also has more cash than debt, so we're pretty confident it can manage its debt safely.

See our latest analysis for Métropole Télévision

But the bad news is that Métropole Télévision has seen its EBIT plunge 18% in the last twelve months. We think hat kind of performance, if repeated frequently, could well lead to difficulties for the stock. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Métropole Télévision 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 business needs free cash flow to pay off debt; accounting profits just don't cut it. While Métropole Télévision 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, Métropole Télévision recorded free cash flow worth 68% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While Métropole Télévision does have more liabilities than liquid assets, it also has net cash of €97.0m. The cherry on top was that in converted 68% of that EBIT to free cash flow, bringing in €133m. So we are not troubled with Métropole Télévision's debt use. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 1 warning sign for Métropole Télévision that you should be aware of.

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.