Nasdaq
华尔街日报Spectrum Talent Management (NSE:SPECTSTM) Has A Pretty Healthy 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.' 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. We can see that Spectrum Talent Management Limited (NSE:SPECTSTM) does use debt in its business. But the real question is whether this debt is making the company risky.
Why Does Debt Bring Risk?
Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.
How Much Debt Does Spectrum Talent Management Carry?
You can click the graphic below for the historical numbers, but it shows that as of September 2025 Spectrum Talent Management had ₹440.1m of debt, an increase on ₹139.7m, over one year. However, it also had ₹431.0m in cash, and so its net debt is ₹9.11m.
How Strong Is Spectrum Talent Management's Balance Sheet?
According to the last reported balance sheet, Spectrum Talent Management had liabilities of ₹964.6m due within 12 months, and liabilities of ₹152.0m due beyond 12 months. Offsetting these obligations, it had cash of ₹431.0m as well as receivables valued at ₹1.80b due within 12 months. So it can boast ₹1.11b more liquid assets than total liabilities.
This surplus strongly suggests that Spectrum Talent Management has a rock-solid balance sheet (and the debt is of no concern whatsoever). Having regard to this fact, we think its balance sheet is as strong as an ox. But either way, Spectrum Talent Management has virtually no net debt, so it's fair to say it does not have a heavy debt load!
Check out our latest analysis for Spectrum Talent Management
In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).
With debt at a measly 0.097 times EBITDA and EBIT covering interest a whopping 13.3 times, it's clear that Spectrum Talent Management is not a desperate borrower. Indeed relative to its earnings its debt load seems light as a feather. But the bad news is that Spectrum Talent Management has seen its EBIT plunge 18% in the last twelve months. If that rate of decline in earnings continues, the company could find itself in a tight spot. When analysing debt levels, the balance sheet is the obvious place to start. But it is Spectrum Talent Management'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.
But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So we always check how much of that EBIT is translated into free cash flow. During the last three years, Spectrum Talent Management burned a lot of cash. While that may be a result of expenditure for growth, it does make the debt far more risky.
Our View
Spectrum Talent Management's conversion of EBIT to free cash flow was a real negative on this analysis, as was its EBIT growth rate. But its interest cover was significantly redeeming. Considering this range of data points, we think Spectrum Talent Management is in a good position to manage its debt levels. But a word of caution: we think debt levels are high enough to justify ongoing monitoring. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Spectrum Talent Management (of which 1 is a bit unpleasant!) you should know about.
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
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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.