Is Timee (TSE:215A) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, Timee, Inc. (TSE:215A) does carry debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Timee's Debt?

You can click the graphic below for the historical numbers, but it shows that Timee had JP¥10.7b of debt in July 2025, down from JP¥11.4b, one year before. But it also has JP¥12.6b in cash to offset that, meaning it has JP¥1.87b net cash.

A Look At Timee's Liabilities

Zooming in on the latest balance sheet data, we can see that Timee had liabilities of JP¥15.9b due within 12 months and liabilities of JP¥660.2m due beyond that. Offsetting these obligations, it had cash of JP¥12.6b as well as receivables valued at JP¥3.38b due within 12 months. So it has liabilities totalling JP¥641.0m more than its cash and near-term receivables, combined.

Having regard to Timee's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the JP¥153.2b company is struggling for cash, we still think it's worth monitoring its balance sheet. Despite its noteworthy liabilities, Timee boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Timee

In addition to that, we're happy to report that Timee has boosted its EBIT by 78%, thus reducing the spectre of future debt repayments. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Timee can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. Timee may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. In the last two years, Timee's free cash flow amounted to 27% of its EBIT, less than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While it is always sensible to look at a company's total liabilities, it is very reassuring that Timee has JP¥1.87b in net cash. And we liked the look of last year's 78% year-on-year EBIT growth. So is Timee's debt a risk? It doesn't seem so to us. 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. Case in point: We've spotted 1 warning sign for Timee you should be aware of.

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.