Does Aurionpro Solutions (NSE:AURIONPRO) Have A Healthy Balance Sheet?

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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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Aurionpro Solutions Limited (NSE:AURIONPRO) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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, 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 Aurionpro Solutions's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Aurionpro Solutions had ₹305.0m of debt in March 2025, down from ₹812.5m, one year before. But on the other hand it also has ₹3.62b in cash, leading to a ₹3.31b net cash position.

A Look At Aurionpro Solutions' Liabilities

The latest balance sheet data shows that Aurionpro Solutions had liabilities of ₹3.76b due within a year, and liabilities of ₹654.7m falling due after that. On the other hand, it had cash of ₹3.62b and ₹3.06b worth of receivables due within a year. So it can boast ₹2.26b more liquid assets than total liabilities.

This short term liquidity is a sign that Aurionpro Solutions could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Aurionpro Solutions has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Aurionpro Solutions

Another good sign is that Aurionpro Solutions has been able to increase its EBIT by 22% in twelve months, making it easier to pay down debt. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Aurionpro Solutions's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Aurionpro Solutions 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. Looking at the most recent three years, Aurionpro Solutions recorded free cash flow of 26% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While it is always sensible to investigate a company's debt, in this case Aurionpro Solutions has ₹3.31b in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 22% over the last year. So is Aurionpro Solutions's debt a risk? It doesn't seem so to us. 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. Be aware that Aurionpro Solutions is showing 1 warning sign in our investment analysis , you should know about...

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.