Is WiseTech Global (ASX:WTC) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that WiseTech Global Limited (ASX:WTC) does use debt in its business. But the more important question is: how much risk is that debt creating?

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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 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is WiseTech Global's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 WiseTech Global had debt of US$65.0m, up from US$53.4m in one year. However, it does have US$168.3m in cash offsetting this, leading to net cash of US$103.3m.

How Healthy Is WiseTech Global's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that WiseTech Global had liabilities of US$270.7m due within 12 months and liabilities of US$259.5m due beyond that. On the other hand, it had cash of US$168.3m and US$101.7m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$260.2m.

Having regard to WiseTech Global's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the US$15.7b company is struggling for cash, we still think it's worth monitoring its balance sheet. Despite its noteworthy liabilities, WiseTech Global boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for WiseTech Global

Another good sign is that WiseTech Global has been able to increase its EBIT by 25% in twelve months, making it easier to pay down debt. 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 WiseTech Global can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While WiseTech Global has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last three years, WiseTech Global produced sturdy free cash flow equating to 68% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While it is always sensible to look at a company's total liabilities, it is very reassuring that WiseTech Global has US$103.3m in net cash. And it impressed us with its EBIT growth of 25% over the last year. So is WiseTech Global's debt a risk? It doesn't seem so to us. Over time, share prices tend to follow earnings per share, so if you're interested in WiseTech Global, you may well want to click here to check an interactive graph of its earnings per share history.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.