Here's Why Nayax (TLV:NYAX) Can Manage Its Debt Responsibly

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 note that Nayax Ltd. (TLV:NYAX) does have debt on its balance sheet. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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.

What Is Nayax's Debt?

As you can see below, at the end of March 2025, Nayax had US$161.0m of debt, up from US$65.3m a year ago. Click the image for more detail. But on the other hand it also has US$176.8m in cash, leading to a US$15.8m net cash position.

A Look At Nayax's Liabilities

Zooming in on the latest balance sheet data, we can see that Nayax had liabilities of US$226.1m due within 12 months and liabilities of US$160.0m due beyond that. Offsetting these obligations, it had cash of US$176.8m as well as receivables valued at US$119.8m due within 12 months. So its liabilities total US$89.4m more than the combination of its cash and short-term receivables.

Since publicly traded Nayax shares are worth a total of US$1.68b, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Nayax boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Nayax

We also note that Nayax improved its EBIT from a last year's loss to a positive US$15m. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Nayax's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Nayax 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. Happily for any shareholders, Nayax actually produced more free cash flow than EBIT over the last year. That sort of strong cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Summing Up

We could understand if investors are concerned about Nayax's liabilities, but we can be reassured by the fact it has has net cash of US$15.8m. The cherry on top was that in converted 110% of that EBIT to free cash flow, bringing in US$17m. So we are not troubled with Nayax's debt use. Over time, share prices tend to follow earnings per share, so if you're interested in Nayax, you may well want to click here to check an interactive graph of its earnings per share history.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.