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COMSYS Holdings (TSE:1721) Seems To Use Debt Rather Sparingly

Simply Wall St · 3d ago

Warren Buffett famously said, '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. Importantly, COMSYS Holdings Corporation (TSE:1721) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is COMSYS Holdings's Net Debt?

As you can see below, COMSYS Holdings had JP¥2.57b of debt at September 2025, down from JP¥3.18b a year prior. But it also has JP¥42.7b in cash to offset that, meaning it has JP¥40.1b net cash.

debt-equity-history-analysis
TSE:1721 Debt to Equity History January 7th 2026

How Healthy Is COMSYS Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that COMSYS Holdings had liabilities of JP¥106.7b due within 12 months and liabilities of JP¥22.2b due beyond that. Offsetting these obligations, it had cash of JP¥42.7b as well as receivables valued at JP¥152.2b due within 12 months. So it actually has JP¥66.1b more liquid assets than total liabilities.

This short term liquidity is a sign that COMSYS Holdings could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that COMSYS Holdings has more cash than debt is arguably a good indication that it can manage its debt safely.

See our latest analysis for COMSYS Holdings

And we also note warmly that COMSYS Holdings grew its EBIT by 13% last year, making its debt load easier to handle. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if COMSYS Holdings 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.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. COMSYS Holdings 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. During the last three years, COMSYS Holdings produced sturdy free cash flow equating to 59% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While it is always sensible to investigate a company's debt, in this case COMSYS Holdings has JP¥40.1b in net cash and a decent-looking balance sheet. And it also grew its EBIT by 13% over the last year. So we don't think COMSYS Holdings's use of debt is risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 1 warning sign with COMSYS Holdings , 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.