Here's Why Intelbras - Indústria de Telecomunicação Eletrônica Brasileira (BVMF:INTB3) Can Manage Its Debt Responsibly

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.' 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. We note that Intelbras S.A. - Indústria de Telecomunicação Eletrônica Brasileira (BVMF:INTB3) does have debt on its balance sheet. But is this debt a concern to shareholders?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

What Is Intelbras - Indústria de Telecomunicação Eletrônica Brasileira's Net Debt?

The image below, which you can click on for greater detail, shows that at September 2025 Intelbras - Indústria de Telecomunicação Eletrônica Brasileira had debt of R$1.03b, up from R$960.4m in one year. However, it does have R$1.24b in cash offsetting this, leading to net cash of R$211.0m.

How Healthy Is Intelbras - Indústria de Telecomunicação Eletrônica Brasileira's Balance Sheet?

We can see from the most recent balance sheet that Intelbras - Indústria de Telecomunicação Eletrônica Brasileira had liabilities of R$1.62b falling due within a year, and liabilities of R$792.8m due beyond that. On the other hand, it had cash of R$1.24b and R$1.34b worth of receivables due within a year. So it actually has R$165.5m more liquid assets than total liabilities.

This surplus suggests that Intelbras - Indústria de Telecomunicação Eletrônica Brasileira has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Intelbras - Indústria de Telecomunicação Eletrônica Brasileira has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for Intelbras - Indústria de Telecomunicação Eletrônica Brasileira

In fact Intelbras - Indústria de Telecomunicação Eletrônica Brasileira's saving grace is its low debt levels, because its EBIT has tanked 20% in the last twelve months. When a company sees its earnings tank, it can sometimes find its relationships with its lenders turn sour. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Intelbras - Indústria de Telecomunicação Eletrônica Brasileira 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. While Intelbras - Indústria de Telecomunicação Eletrônica Brasileira has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the most recent three years, Intelbras - Indústria de Telecomunicação Eletrônica Brasileira recorded free cash flow worth 66% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Intelbras - Indústria de Telecomunicação Eletrônica Brasileira has net cash of R$211.0m, as well as more liquid assets than liabilities. So we don't have any problem with Intelbras - Indústria de Telecomunicação Eletrônica Brasileira's use of debt. 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. We've identified 1 warning sign with Intelbras - Indústria de Telecomunicação Eletrônica Brasileira , and understanding them should be part of your investment process.

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.