Does Shreeji Shipping Global (NSE:SHREEJISPG) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that Shreeji Shipping Global Limited (NSE:SHREEJISPG) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

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. 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, 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Shreeji Shipping Global's Debt?

The image below, which you can click on for greater detail, shows that Shreeji Shipping Global had debt of ₹2.00b at the end of September 2025, a reduction from ₹2.56b over a year. But on the other hand it also has ₹3.60b in cash, leading to a ₹1.61b net cash position.

How Healthy Is Shreeji Shipping Global's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Shreeji Shipping Global had liabilities of ₹3.27b due within 12 months and liabilities of ₹319.7m due beyond that. Offsetting this, it had ₹3.60b in cash and ₹1.55b in receivables that were due within 12 months. So it can boast ₹1.56b more liquid assets than total liabilities.

This short term liquidity is a sign that Shreeji Shipping Global could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Shreeji Shipping Global boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Shreeji Shipping Global

And we also note warmly that Shreeji Shipping Global grew its EBIT by 15% last year, making its debt load easier to handle. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Shreeji Shipping Global 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, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While Shreeji Shipping Global 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, Shreeji Shipping Global recorded free cash flow of 40% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Shreeji Shipping Global has net cash of ₹1.61b, as well as more liquid assets than liabilities. And it impressed us with its EBIT growth of 15% over the last year. So is Shreeji Shipping Global'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. For example - Shreeji Shipping Global has 1 warning sign we think you should be aware of.

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.