Is Growth X PartnersInc (TSE:244A) A Risky Investment?

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 Growth X Partners,Inc. (TSE:244A) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt A Problem?

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. 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. 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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does Growth X PartnersInc Carry?

You can click the graphic below for the historical numbers, but it shows that Growth X PartnersInc had JP¥411.0m of debt in August 2025, down from JP¥830.0m, one year before. However, its balance sheet shows it holds JP¥2.06b in cash, so it actually has JP¥1.65b net cash.

How Healthy Is Growth X PartnersInc's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Growth X PartnersInc had liabilities of JP¥1.09b due within 12 months and liabilities of JP¥265.0m due beyond that. On the other hand, it had cash of JP¥2.06b and JP¥870.0m worth of receivables due within a year. So it actually has JP¥1.58b more liquid assets than total liabilities.

This excess liquidity suggests that Growth X PartnersInc is taking a careful approach to debt. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Succinctly put, Growth X PartnersInc boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for Growth X PartnersInc

Another good sign is that Growth X PartnersInc has been able to increase its EBIT by 28% in twelve months, making it easier to pay down debt. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Growth X PartnersInc will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Growth X PartnersInc 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. Over the most recent three years, Growth X PartnersInc recorded free cash flow worth 61% 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 we empathize with investors who find debt concerning, you should keep in mind that Growth X PartnersInc has net cash of JP¥1.65b, as well as more liquid assets than liabilities. And we liked the look of last year's 28% year-on-year EBIT growth. So we don't think Growth X PartnersInc's use of debt is risky. 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 2 warning signs for Growth X PartnersInc you should be aware of.

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.