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 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 Angi Inc. (NASDAQ:ANGI) makes use of debt. But the real question is whether this debt is making the company risky.

What Risk Does Debt Bring?

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. 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.

Check out our latest analysis for Angi

How Much Debt Does Angi Carry?

As you can see below, Angi had US$495.7m of debt, at June 2023, which is about the same as the year before. You can click the chart for greater detail. However, it also had US$370.6m in cash, and so its net debt is US$125.1m.

How Strong Is Angi's Balance Sheet?

According to the last reported balance sheet, Angi had liabilities of US$303.4m due within 12 months, and liabilities of US$556.9m due beyond 12 months. On the other hand, it had cash of US$370.6m and US$78.5m worth of receivables due within a year. So it has liabilities totalling US$411.3m more than its cash and near-term receivables, combined.

Angi has a market capitalization of US$815.1m, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Angi'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.

Over 12 months, Angi made a loss at the EBIT level, and saw its revenue drop to US$1.7b, which is a fall of 6.7%. We would much prefer see growth.

Caveat Emptor

Over the last twelve months Angi produced an earnings before interest and tax (EBIT) loss. Indeed, it lost US$73m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of US$101m into a profit. So we do think this stock is quite 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. Be aware that Angi is showing 1 warning sign in our investment analysis , 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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