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Does Ambev (BVMF:ABEV3) Have A Healthy Balance Sheet?

Simply Wall St · 2d ago

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.' 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 Ambev S.A. (BVMF:ABEV3) does use debt in its business. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

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. 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 Ambev Carry?

You can click the graphic below for the historical numbers, but it shows that Ambev had R$432.3m of debt in September 2025, down from R$486.4m, one year before. But on the other hand it also has R$19.8b in cash, leading to a R$19.4b net cash position.

debt-equity-history-analysis
BOVESPA:ABEV3 Debt to Equity History December 8th 2025

A Look At Ambev's Liabilities

According to the last reported balance sheet, Ambev had liabilities of R$36.6b due within 12 months, and liabilities of R$11.4b due beyond 12 months. Offsetting this, it had R$19.8b in cash and R$8.88b in receivables that were due within 12 months. So it has liabilities totalling R$19.3b more than its cash and near-term receivables, combined.

Given Ambev has a humongous market capitalization of R$212.2b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Ambev boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for Ambev

And we also note warmly that Ambev grew its EBIT by 16% last year, making its debt load easier to handle. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Ambev's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Ambev 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. During the last three years, Ambev generated free cash flow amounting to a very robust 95% of its EBIT, more than we'd expect. That puts it in a very strong position to pay down debt.

Summing Up

We could understand if investors are concerned about Ambev's liabilities, but we can be reassured by the fact it has has net cash of R$19.4b. And it impressed us with free cash flow of R$21b, being 95% of its EBIT. So is Ambev'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. Be aware that Ambev is showing 1 warning sign in our investment analysis , you should know about...

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.