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华尔街日报Hiab Oyj (HEL:HIAB) Has A Rock Solid Balance Sheet
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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. As with many other companies Hiab Oyj (HEL:HIAB) makes use of debt. But should shareholders be worried about its use of debt?
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. 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 examine debt levels, we first consider both cash and debt levels, together.
How Much Debt Does Hiab Oyj Carry?
The image below, which you can click on for greater detail, shows that Hiab Oyj had debt of €189.5m at the end of September 2025, a reduction from €275.6m over a year. However, it does have €581.0m in cash offsetting this, leading to net cash of €391.5m.
How Strong Is Hiab Oyj's Balance Sheet?
We can see from the most recent balance sheet that Hiab Oyj had liabilities of €670.5m falling due within a year, and liabilities of €112.3m due beyond that. On the other hand, it had cash of €581.0m and €314.0m worth of receivables due within a year. So it actually has €112.2m more liquid assets than total liabilities.
This surplus suggests that Hiab Oyj has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Hiab Oyj has more cash than debt is arguably a good indication that it can manage its debt safely.
Check out our latest analysis for Hiab Oyj
The good news is that Hiab Oyj has increased its EBIT by 8.0% over twelve months, which should ease any concerns about debt repayment. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Hiab Oyj's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Hiab Oyj 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. Happily for any shareholders, Hiab Oyj actually produced more free cash flow than EBIT over the last three years. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.
Summing Up
While we empathize with investors who find debt concerning, you should keep in mind that Hiab Oyj has net cash of €391.5m, as well as more liquid assets than liabilities. And it impressed us with free cash flow of €281m, being 166% of its EBIT. So is Hiab Oyj's debt a risk? It doesn't seem so to us. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 2 warning signs for Hiab Oyj that you should be aware of before investing here.
When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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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.