Ai Robotics (TSE:247A) Seems To Use Debt Rather Sparingly

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 Ai Robotics Inc. (TSE:247A) makes use of debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Ai Robotics Carry?

As you can see below, at the end of June 2025, Ai Robotics had JP¥2.55b of debt, up from JP¥2.27b a year ago. Click the image for more detail. But it also has JP¥3.74b in cash to offset that, meaning it has JP¥1.19b net cash.

A Look At Ai Robotics' Liabilities

The latest balance sheet data shows that Ai Robotics had liabilities of JP¥3.32b due within a year, and liabilities of JP¥1.66b falling due after that. Offsetting these obligations, it had cash of JP¥3.74b as well as receivables valued at JP¥1.65b due within 12 months. So it actually has JP¥420.0m more liquid assets than total liabilities.

This state of affairs indicates that Ai Robotics' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the JP¥100.8b company is short on cash, but still worth keeping an eye on the balance sheet. Succinctly put, Ai Robotics boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Ai Robotics

Another good sign is that Ai Robotics has been able to increase its EBIT by 29% in twelve months, making it easier to pay down debt. 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 Ai Robotics 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, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While Ai Robotics 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, Ai Robotics recorded free cash flow worth 53% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While it is always sensible to investigate a company's debt, in this case Ai Robotics has JP¥1.19b in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 29% over the last year. So is Ai Robotics'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. For example, we've discovered 1 warning sign for Ai Robotics that you should be aware of before investing here.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.