These 4 Measures Indicate That Cupid (NSE:CUPID) Is Using Debt Reasonably Well

Warren Buffett famously said, '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. As with many other companies Cupid Limited (NSE:CUPID) makes use of debt. But should shareholders be worried about its use of debt?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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 Cupid Carry?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Cupid had ₹206.3m of debt, an increase on ₹90.4m, over one year. But it also has ₹1.92b in cash to offset that, meaning it has ₹1.71b net cash.

A Look At Cupid's Liabilities

According to the last reported balance sheet, Cupid had liabilities of ₹488.7m due within 12 months, and liabilities of ₹121.4m due beyond 12 months. Offsetting this, it had ₹1.92b in cash and ₹897.9m in receivables that were due within 12 months. So it actually has ₹2.21b more liquid assets than total liabilities.

Having regard to Cupid's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the ₹120.1b company is struggling for cash, we still think it's worth monitoring its balance sheet. Succinctly put, Cupid boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Cupid

And we also note warmly that Cupid grew its EBIT by 14% last year, making its debt load easier to handle. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Cupid 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 Cupid 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. Considering the last three years, Cupid actually recorded a cash outflow, overall. Debt is usually more expensive, and almost always more risky in the hands of a company with negative free cash flow. Shareholders ought to hope for an improvement.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Cupid has net cash of ₹1.71b, as well as more liquid assets than liabilities. On top of that, it increased its EBIT by 14% in the last twelve months. So we are not troubled with Cupid's debt use. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Cupid has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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.