Future (TSE:4722) Has A Pretty Healthy Balance Sheet

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 note that Future Corporation (TSE:4722) does have debt on its balance sheet. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Future's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Future had JP¥15.7b of debt in September 2025, down from JP¥18.6b, one year before. However, it does have JP¥31.3b in cash offsetting this, leading to net cash of JP¥15.6b.

A Look At Future's Liabilities

The latest balance sheet data shows that Future had liabilities of JP¥14.2b due within a year, and liabilities of JP¥18.4b falling due after that. On the other hand, it had cash of JP¥31.3b and JP¥17.0b worth of receivables due within a year. So it can boast JP¥15.7b more liquid assets than total liabilities.

This surplus suggests that Future has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Future boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Future

Future's EBIT was pretty flat over the last year, but that shouldn't be an issue given the it doesn't have a lot of debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Future 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. Future 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, Future produced sturdy free cash flow equating to 61% 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 we empathize with investors who find debt concerning, you should keep in mind that Future has net cash of JP¥15.6b, as well as more liquid assets than liabilities. So is Future's debt a risk? It doesn't seem so to us. Over time, share prices tend to follow earnings per share, so if you're interested in Future, you may well want to click here to check an interactive graph of its earnings per share history.

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.