---
title: "These 4 Measures Indicate That Telefonaktiebolaget LM Ericsson (STO:ERIC B) Is Using Debt Reasonably Well"
description: "Telefonaktiebolaget LM Ericsson (STO:ERIC B) has reduced its debt from kr41.2b to kr35.5b while holding kr49.7b in cash, resulting in a net cash position of kr14.2b. Despite total liabilities of kr193"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/246554360.md"
published_at: "2025-06-29T10:25:55.000Z"
---

# These 4 Measures Indicate That Telefonaktiebolaget LM Ericsson (STO:ERIC B) Is Using Debt Reasonably Well

> Telefonaktiebolaget LM Ericsson (STO:ERIC B) has reduced its debt from kr41.2b to kr35.5b while holding kr49.7b in cash, resulting in a net cash position of kr14.2b. Despite total liabilities of kr193.1b, its market capitalization of kr269.4b suggests it can manage its debt effectively. The company has generated free cash flow exceeding EBIT, indicating strong cash management. While its balance sheet shows some risks, the overall debt usage appears reasonable, with analysts noting two warning signs to monitor.

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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. Importantly, **Telefonaktiebolaget LM Ericsson (publ)** (STO:ERIC B) does carry debt. But the more important question is: how much risk is that debt creating?

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

## When Is Debt A Problem?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

## What Is Telefonaktiebolaget LM Ericsson's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Telefonaktiebolaget LM Ericsson had kr35.5b of debt in March 2025, down from kr41.2b, one year before. However, its balance sheet shows it holds kr49.7b in cash, so it actually has kr14.2b net cash.

## How Strong Is Telefonaktiebolaget LM Ericsson's Balance Sheet?

According to the last reported balance sheet, Telefonaktiebolaget LM Ericsson had liabilities of kr131.6b due within 12 months, and liabilities of kr61.5b due beyond 12 months. On the other hand, it had cash of kr49.7b and kr62.4b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by kr81.0b.

While this might seem like a lot, it is not so bad since Telefonaktiebolaget LM Ericsson has a huge market capitalization of kr269.4b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. While it does have liabilities worth noting, Telefonaktiebolaget LM Ericsson also has more cash than debt, so we're pretty confident it can manage its debt safely.

View our latest analysis for Telefonaktiebolaget LM Ericsson

The modesty of its debt load may become crucial for Telefonaktiebolaget LM Ericsson if management cannot prevent a repeat of the 24% cut to EBIT over the last year. When it comes to paying off debt, falling earnings are no more useful than sugary sodas are for your health. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Telefonaktiebolaget LM Ericsson can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. Telefonaktiebolaget LM Ericsson may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the last three years, Telefonaktiebolaget LM Ericsson actually produced more free cash flow than EBIT. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

## Summing Up

Although Telefonaktiebolaget LM Ericsson's balance sheet isn't particularly strong, due to the total liabilities, it is clearly positive to see that it has net cash of kr14.2b. And it impressed us with free cash flow of kr42b, being 132% of its EBIT. So we are not troubled with Telefonaktiebolaget LM Ericsson's debt use. 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. For instance, we've identified **2 warning signs for Telefonaktiebolaget LM Ericsson** that you should be aware of.

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.

### Related Stocks

- [ERIC.US - Ericsson](https://longbridge.com/en/quote/ERIC.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| 愛立信因 4G 和 5G 無線專利許可問題起訴宏碁 | 愛立信在特拉華州聯邦法院對宏碁提起訴訟，聲稱宏碁違反了其以公平條款許可 4G 和 5G 無線技術標準必要專利的義務。此次訴訟是在宏碁之前對愛立信客户提起的專利侵權訴訟之後進行的。愛立信尋求法院裁定其並未侵犯宏碁的專利，並且宏碁違反了善意談判 | [Link](https://longbridge.com/en/news/276255647.md) |
| 愛立信將與多倫多大學合作，投資超過 73 萬美元用於無線基礎設施建設 | 2026 年 2 月 18 日東部時間上午 10:13（MT Newswires）-- 愛立信（ERIC）週三表示，計劃在與多倫多大學簽署的初步三年框架協議下，投資 100 萬加元（731,635 美元）以提升加拿大的無線通信基礎設施，旨在 | [Link](https://longbridge.com/en/news/276245966.md) |
| AI 狂潮吞噬全球產能，記憶體價格暴漲引爆消費電子「生存戰」 | 隨著人工智慧熱潮席捲全球，內存價格暴漲引發消費電子行業的生存危機。蘋果被迫接受鎧俠的漲價條件，NAND 內存售價翻倍。羣聯電子執行長指出，AI 的需求導致存儲產能短缺，消費電子行業面臨材料短缺和成本上升的困境，預計全球手機、個人電腦及電視出 | [Link](https://longbridge.com/en/news/276420139.md) |
| 長假期利好遊戲股 網易或符雙重主要上市標準 大行看好心動公司 | 長假期利好遊戲股，網易（9999）去年第四季盈利下滑，但股價已反映情況，適合撈底。心動公司（2400）中期盈利增長強勁。網易全年純利 337.6 億元，股東權益回報率 21%。網易有望符合港交所雙重主要上市標準，若成功將可納入滬深港通。新春 | [Link](https://longbridge.com/en/news/276402845.md) |
| 宇樹人形機器人搭載禾賽激光雷達 春晚效應推升股價 | 宇樹科技的兩款人形機器人在央視春晚表演中搭載禾賽 JT128 雷射雷達，展現出高水平的協同動作。受此影響，禾賽（HSAI）股價在美股市場上漲，週二最高達到 28.21 美元，收盤時為 26.77 美元，漲幅近 4%。禾賽 JT 系列雷射雷達 | [Link](https://longbridge.com/en/news/276198028.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
