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Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We can see that Marvell Technology, Inc. (NASDAQ:MRVL) does use debt in its business. But is this debt a concern to shareholders?
Why Does Debt Bring Risk?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.
What Is Marvell Technology's Net Debt?
The chart below, which you can click on for greater detail, shows that Marvell Technology had US$4.06b in debt in February 2025; about the same as the year before. However, it also had US$948.3m in cash, and so its net debt is US$3.12b.
How Strong Is Marvell Technology's Balance Sheet?
According to the last reported balance sheet, Marvell Technology had liabilities of US$2.03b due within 12 months, and liabilities of US$4.75b due beyond 12 months. Offsetting these obligations, it had cash of US$948.3m as well as receivables valued at US$1.03b due within 12 months. So it has liabilities totalling US$4.80b more than its cash and near-term receivables, combined.
Given Marvell Technology has a humongous market capitalization of US$55.1b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Marvell Technology's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
View our latest analysis for Marvell Technology
Over 12 months, Marvell Technology reported revenue of US$5.8b, which is a gain of 4.7%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.