J.E.T (TSE:6228) Is Carrying A Fair Bit Of 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. As with many other companies J.E.T. Co., Ltd. (TSE:6228) makes use of 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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does J.E.T Carry?

As you can see below, J.E.T had JP¥5.79b of debt at June 2025, down from JP¥8.86b a year prior. However, it also had JP¥2.38b in cash, and so its net debt is JP¥3.41b.

How Healthy Is J.E.T's Balance Sheet?

We can see from the most recent balance sheet that J.E.T had liabilities of JP¥7.53b falling due within a year, and liabilities of JP¥4.37b due beyond that. Offsetting these obligations, it had cash of JP¥2.38b as well as receivables valued at JP¥608.0m due within 12 months. So its liabilities total JP¥8.91b more than the combination of its cash and short-term receivables.

This deficit is considerable relative to its market capitalization of JP¥13.5b, so it does suggest shareholders should keep an eye on J.E.T's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But it is J.E.T's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for J.E.T

In the last year J.E.T had a loss before interest and tax, and actually shrunk its revenue by 35%, to JP¥15b. To be frank that doesn't bode well.

Caveat Emptor

While J.E.T's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost a very considerable JP¥1.4b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. For example, we would not want to see a repeat of last year's loss of JP¥2.4b. In the meantime, we consider the stock very risky. 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. To that end, you should learn about the 3 warning signs we've spotted with J.E.T (including 2 which shouldn't be ignored) .

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.