Thyrocare Technologies (NSE:THYROCARE) Has A Rock Solid Balance Sheet

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.' 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. Importantly, Thyrocare Technologies Limited (NSE:THYROCARE) does carry debt. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Thyrocare Technologies's Net Debt?

The image below, which you can click on for greater detail, shows that Thyrocare Technologies had debt of ₹246.8m at the end of March 2025, a reduction from ₹423.4m over a year. But it also has ₹1.55b in cash to offset that, meaning it has ₹1.30b net cash.

How Healthy Is Thyrocare Technologies' Balance Sheet?

The latest balance sheet data shows that Thyrocare Technologies had liabilities of ₹1.22b due within a year, and liabilities of ₹238.5m falling due after that. Offsetting this, it had ₹1.55b in cash and ₹732.9m in receivables that were due within 12 months. So it can boast ₹826.4m more liquid assets than total liabilities.

This state of affairs indicates that Thyrocare Technologies' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₹66.9b company is struggling for cash, we still think it's worth monitoring its balance sheet. Simply put, the fact that Thyrocare Technologies has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for Thyrocare Technologies

In addition to that, we're happy to report that Thyrocare Technologies has boosted its EBIT by 55%, thus reducing the spectre of future debt repayments. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Thyrocare Technologies'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 business needs free cash flow to pay off debt; accounting profits just don't cut it. While Thyrocare Technologies 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. Happily for any shareholders, Thyrocare Technologies actually produced more free cash flow than EBIT over the last three years. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Thyrocare Technologies has net cash of ₹1.30b, as well as more liquid assets than liabilities. The cherry on top was that in converted 109% of that EBIT to free cash flow, bringing in ₹1.5b. So we don't think Thyrocare Technologies's use of debt is risky. 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. For example, we've discovered 1 warning sign for Thyrocare Technologies that you should be aware of before investing here.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.