Is Fischer Medical Ventures (NSE:FISCHER) Using Too Much Debt?

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.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Fischer Medical Ventures Limited (NSE:FISCHER) does use debt in its business. But is this debt a concern to shareholders?

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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. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Fischer Medical Ventures Carry?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Fischer Medical Ventures had ₹604.0m of debt, an increase on none, over one year. However, its balance sheet shows it holds ₹2.51b in cash, so it actually has ₹1.91b net cash.

How Strong Is Fischer Medical Ventures' Balance Sheet?

The latest balance sheet data shows that Fischer Medical Ventures had liabilities of ₹815.7m due within a year, and liabilities of ₹379.4m falling due after that. On the other hand, it had cash of ₹2.51b and ₹760.7m worth of receivables due within a year. So it can boast ₹2.08b more liquid assets than total liabilities.

This surplus suggests that Fischer Medical Ventures has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Fischer Medical Ventures boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Fischer Medical Ventures

In addition to that, we're happy to report that Fischer Medical Ventures has boosted its EBIT by 89%, thus reducing the spectre of future debt repayments. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Fischer Medical Ventures 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.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Fischer Medical Ventures 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 last three years, Fischer Medical Ventures saw substantial negative free cash flow, in total. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.

Summing Up

While it is always sensible to investigate a company's debt, in this case Fischer Medical Ventures has ₹1.91b in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 89% over the last year. So we are not troubled with Fischer Medical Ventures'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 example Fischer Medical Ventures has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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.