Rise Consulting Group (TSE:9168) Could Easily Take On More Debt

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. We can see that Rise Consulting Group, Inc. (TSE:9168) does use debt in its business. But is this debt a concern to shareholders?

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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. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth 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 Rise Consulting Group's Net Debt?

As you can see below, Rise Consulting Group had JP¥1.46b of debt at May 2025, down from JP¥1.97b a year prior. However, its balance sheet shows it holds JP¥2.55b in cash, so it actually has JP¥1.09b net cash.

How Strong Is Rise Consulting Group's Balance Sheet?

We can see from the most recent balance sheet that Rise Consulting Group had liabilities of JP¥1.50b falling due within a year, and liabilities of JP¥1.21b due beyond that. Offsetting these obligations, it had cash of JP¥2.55b as well as receivables valued at JP¥897.0m due within 12 months. So it actually has JP¥737.0m more liquid assets than total liabilities.

This surplus suggests that Rise Consulting Group has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Rise Consulting Group has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Rise Consulting Group

And we also note warmly that Rise Consulting Group grew its EBIT by 19% last year, making its debt load easier to handle. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Rise Consulting Group'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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Rise Consulting Group 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. Over the most recent three years, Rise Consulting Group recorded free cash flow worth 55% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While it is always sensible to investigate a company's debt, in this case Rise Consulting Group has JP¥1.09b in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 19% over the last year. So is Rise Consulting Group'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 - Rise Consulting Group has 1 warning sign we think 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.