Is Dai Nippon Printing (TSE:7912) A Risky Investment?
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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Dai Nippon Printing Co., Ltd. (TSE:7912) does carry debt. But the real question is whether this debt is making the company risky.
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.
How Much Debt Does Dai Nippon Printing Carry?
You can click the graphic below for the historical numbers, but it shows that as of September 2025 Dai Nippon Printing had JP¥252.8b of debt, an increase on JP¥155.1b, over one year. However, its balance sheet shows it holds JP¥320.7b in cash, so it actually has JP¥67.9b net cash.
A Look At Dai Nippon Printing's Liabilities
The latest balance sheet data shows that Dai Nippon Printing had liabilities of JP¥395.2b due within a year, and liabilities of JP¥371.8b falling due after that. Offsetting this, it had JP¥320.7b in cash and JP¥312.1b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by JP¥134.1b.
Since publicly traded Dai Nippon Printing shares are worth a total of JP¥1.18t, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, Dai Nippon Printing boasts net cash, so it's fair to say it does not have a heavy debt load!
See our latest analysis for Dai Nippon Printing
Also good is that Dai Nippon Printing grew its EBIT at 19% over the last year, further increasing its ability to manage debt. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Dai Nippon Printing'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, a company can only pay off debt with cold hard cash, not accounting profits. While Dai Nippon Printing 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. In the last three years, Dai Nippon Printing created free cash flow amounting to 9.5% of its EBIT, an uninspiring performance. For us, cash conversion that low sparks a little paranoia about is ability to extinguish debt.
Summing Up
While Dai Nippon Printing does have more liabilities than liquid assets, it also has net cash of JP¥67.9b. And we liked the look of last year's 19% year-on-year EBIT growth. So we are not troubled with Dai Nippon Printing's debt use. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Dai Nippon Printing is showing 1 warning sign in our investment analysis , you should know about...
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
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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.