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Future plc, a company in the Communication sector, carries a notable amount of debt, which warrants a closer examination of its financial stability. As of March 2024, Future's total debt stands at £320.5 million, a decrease from £421.7 million the previous year. However, this is partially offset by £23.1 million in cash, resulting in net debt of approximately £297.4 million.
The company's balance sheet reveals a total of £207.3 million in liabilities due within one year and £479.0 million in long-term liabilities. With £23.1 million in cash and £126.9 million in receivables due within the next 12 months, Future Plc (LSE:FUTR)'s liabilities exceed its liquid assets by £536.3 million. Despite this significant deficit, the company’s market value of £1.20 billion suggests it could potentially raise capital to improve its balance sheet if necessary.
To assess Future's debt management, two key ratios are used. The net debt to EBITDA ratio stands at 1.3, and the interest coverage ratio is 4.6 times. These ratios indicate that the company is managing its debt reasonably well, although the high interest payments could be a concern. Future’s EBIT has decreased by 20% over the past year, which may impact its ability to service debt if the trend continues. However, the company has maintained a robust free cash flow, matching 100% of its EBIT over the last three years, which enhances its capacity to handle debt obligations.
Overall, while Future plc faces challenges due to its debt levels and declining earnings, its strong free cash flow position provides some buffer against financial stress. The company’s ability to convert EBIT into free cash flow suggests it is in a relatively stable position to manage its debt, despite the risks associated with its balance sheet.
