JELLY BEANS GROUP (TSE:3070) Is Using Debt Safely

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.' 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 can see that JELLY BEANS GROUP Co., Ltd. (TSE:3070) does use debt in its business. But the more important question is: how much risk is that debt creating?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is JELLY BEANS GROUP's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of October 2025 JELLY BEANS GROUP had JP¥321.0m of debt, an increase on JP¥189.0m, over one year. But on the other hand it also has JP¥1.96b in cash, leading to a JP¥1.64b net cash position.

A Look At JELLY BEANS GROUP's Liabilities

Zooming in on the latest balance sheet data, we can see that JELLY BEANS GROUP had liabilities of JP¥653.0m due within 12 months and liabilities of JP¥288.0m due beyond that. Offsetting these obligations, it had cash of JP¥1.96b as well as receivables valued at JP¥305.0m due within 12 months. So it actually has JP¥1.32b more liquid assets than total liabilities.

This surplus suggests that JELLY BEANS GROUP is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Succinctly put, JELLY BEANS GROUP boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since JELLY BEANS GROUP 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.

Check out our latest analysis for JELLY BEANS GROUP

In the last year JELLY BEANS GROUP wasn't profitable at an EBIT level, but managed to grow its revenue by 80%, to JP¥1.5b. With any luck the company will be able to grow its way to profitability.

So How Risky Is JELLY BEANS GROUP?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months JELLY BEANS GROUP lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through JP¥1.3b of cash and made a loss of JP¥450m. But at least it has JP¥1.64b on the balance sheet to spend on growth, near-term. With very solid revenue growth in the last year, JELLY BEANS GROUP may be on a path to profitability. Pre-profit companies are often risky, but they can also offer great rewards. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 3 warning signs for JELLY BEANS GROUP (1 is a bit concerning) you should be aware of.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.