Does TIS (TSE:3626) Have A Healthy Balance Sheet?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, TIS Inc. (TSE:3626) does carry debt. But should shareholders be worried about its use of debt?

We check all companies for important risks. See what we found for TIS in our free report.

Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is TIS's Debt?

As you can see below, TIS had JP¥37.0b of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has JP¥122.7b in cash to offset that, meaning it has JP¥85.8b net cash.

How Healthy Is TIS' Balance Sheet?

We can see from the most recent balance sheet that TIS had liabilities of JP¥153.2b falling due within a year, and liabilities of JP¥48.8b due beyond that. Offsetting this, it had JP¥122.7b in cash and JP¥151.0b in receivables that were due within 12 months. So it actually has JP¥71.8b more liquid assets than total liabilities.

This short term liquidity is a sign that TIS could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, TIS boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for TIS

The good news is that TIS has increased its EBIT by 3.0% over twelve months, which should ease any concerns about debt repayment. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if TIS can strengthen its balance sheet over time. 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. TIS 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. During the last three years, TIS produced sturdy free cash flow equating to 58% of its EBIT, about what we'd expect. 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 TIS has JP¥85.8b in net cash and a decent-looking balance sheet. So we don't think TIS's use of debt is risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of TIS's earnings per share history for free.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.