These 4 Measures Indicate That Polaris Media (OB:POL) Is Using Debt Reasonably Well

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.' 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 Polaris Media ASA (OB:POL) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. 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.

What Is Polaris Media's Debt?

You can click the graphic below for the historical numbers, but it shows that Polaris Media had kr44.9m of debt in September 2025, down from kr68.7m, one year before. However, it does have kr274.4m in cash offsetting this, leading to net cash of kr229.5m.

A Look At Polaris Media's Liabilities

The latest balance sheet data shows that Polaris Media had liabilities of kr1.07b due within a year, and liabilities of kr792.1m falling due after that. On the other hand, it had cash of kr274.4m and kr313.7m worth of receivables due within a year. So its liabilities total kr1.27b more than the combination of its cash and short-term receivables.

Polaris Media has a market capitalization of kr2.76b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. While it does have liabilities worth noting, Polaris Media also has more cash than debt, so we're pretty confident it can manage its debt safely.

Check out our latest analysis for Polaris Media

It was also good to see that despite losing money on the EBIT line last year, Polaris Media turned things around in the last 12 months, delivering and EBIT of kr42m. There's no doubt that we learn most about debt from the balance sheet. But it is Polaris Media'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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Polaris Media 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 last year, Polaris Media actually produced more free cash flow than EBIT. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

While Polaris Media does have more liabilities than liquid assets, it also has net cash of kr229.5m. The cherry on top was that in converted 362% of that EBIT to free cash flow, bringing in kr152m. So we don't have any problem with Polaris Media's use of debt. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For example - Polaris Media has 3 warning signs we think 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.