Atour Lifestyle Holdings Limited (NASDAQ: ATAT) has been under scrutiny for its use of debt, with some investors questioning whether this makes the company risky. The company had CN¥92.0m of debt as of September 2024, but also had CN¥4.31b in cash, resulting in a net cash position of CN¥4.22b. This indicates that Atour Lifestyle Holdings has more cash than debt, reassuring investors about its ability to manage its debt safely.
The company’s balance sheet shows that it had liabilities of CN¥2.57b due within a year and CN¥2.05b due beyond that, which are offset by its liquid assets. Atour Lifestyle Holdings also grew its EBIT by 125% last year, further bolstering its ability to pay down debt. Additionally, over the last three years, the company has produced more free cash flow than EBIT, indicating strong cash conversion.
Overall, while it is important to consider a company’s total liabilities, Atour Lifestyle Holdings’ strong net cash position and cash flow generation suggest that its use of debt is not risky. The company’s balance sheet looks solid, and its profitability and ability to manage its debt in the future will be key factors to watch. Investors can access a free report for more insights on the company’s financial performance.
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