Aktor Societe Anonyme Holding Company Technical and Energy Projects (ATH:AKTR) Has A Pretty Healthy Balance Sheet

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 Aktor Societe Anonyme Holding Company Technical and Energy Projects (ATH:AKTR) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Aktor Societe Anonyme Holding Company Technical and Energy Projects Carry?

You can click the graphic below for the historical numbers, but it shows that Aktor Societe Anonyme Holding Company Technical and Energy Projects had €304.8m of debt in June 2025, down from €362.7m, one year before. On the flip side, it has €216.4m in cash leading to net debt of about €88.4m.

How Healthy Is Aktor Societe Anonyme Holding Company Technical and Energy Projects' Balance Sheet?

According to the last reported balance sheet, Aktor Societe Anonyme Holding Company Technical and Energy Projects had liabilities of €996.5m due within 12 months, and liabilities of €293.6m due beyond 12 months. Offsetting this, it had €216.4m in cash and €971.6m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €102.1m.

Given Aktor Societe Anonyme Holding Company Technical and Energy Projects has a market capitalization of €1.64b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse.

View our latest analysis for Aktor Societe Anonyme Holding Company Technical and Energy Projects

We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Given net debt is only 0.78 times EBITDA, it is initially surprising to see that Aktor Societe Anonyme Holding Company Technical and Energy Projects's EBIT has low interest coverage of 1.6 times. So while we're not necessarily alarmed we think that its debt is far from trivial. Importantly, Aktor Societe Anonyme Holding Company Technical and Energy Projects grew its EBIT by 52% over the last twelve months, and that growth will make it easier to handle its debt. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Aktor Societe Anonyme Holding Company Technical and Energy Projects will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. Looking at the most recent three years, Aktor Societe Anonyme Holding Company Technical and Energy Projects recorded free cash flow of 23% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Our View

Happily, Aktor Societe Anonyme Holding Company Technical and Energy Projects's impressive EBIT growth rate implies it has the upper hand on its debt. But the stark truth is that we are concerned by its interest cover. All these things considered, it appears that Aktor Societe Anonyme Holding Company Technical and Energy Projects can comfortably handle its current debt levels. Of course, while this leverage can enhance returns on equity, it does bring more risk, so it's worth keeping an eye on this one. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 2 warning signs with Aktor Societe Anonyme Holding Company Technical and Energy Projects , and understanding them should be part of your investment process.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.