Spritzer Bhd (KLSE:SPRITZER) Has A Rock Solid Balance Sheet

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. Importantly, Spritzer Bhd (KLSE:SPRITZER) does carry debt. But the real question is whether this debt is making the company risky.

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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. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Spritzer Bhd's Debt?

You can click the graphic below for the historical numbers, but it shows that Spritzer Bhd had RM35.7m of debt in September 2025, down from RM49.5m, one year before. But it also has RM67.9m in cash to offset that, meaning it has RM32.2m net cash.

How Healthy Is Spritzer Bhd's Balance Sheet?

According to the last reported balance sheet, Spritzer Bhd had liabilities of RM141.1m due within 12 months, and liabilities of RM53.0m due beyond 12 months. Offsetting these obligations, it had cash of RM67.9m as well as receivables valued at RM136.2m due within 12 months. So it actually has RM9.98m more liquid assets than total liabilities.

This state of affairs indicates that Spritzer Bhd's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the RM1.73b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that Spritzer Bhd has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for Spritzer Bhd

In addition to that, we're happy to report that Spritzer Bhd has boosted its EBIT by 49%, thus reducing the spectre of future debt repayments. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Spritzer Bhd can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Spritzer Bhd 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. In the last three years, Spritzer Bhd's free cash flow amounted to 33% of its EBIT, less than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While it is always sensible to investigate a company's debt, in this case Spritzer Bhd has RM32.2m in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 49% over the last year. So is Spritzer Bhd'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 Spritzer Bhd, you may well want to click here to check an interactive graph of its earnings per share history.

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.