Is Bucher Industries (VTX:BUCN) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 Bucher Industries AG (VTX:BUCN) does use debt in its business. But is this debt a concern to shareholders?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is Bucher Industries's Debt?

As you can see below, Bucher Industries had CHF44.1m of debt at June 2025, down from CHF205.8m a year prior. However, it does have CHF371.4m in cash offsetting this, leading to net cash of CHF327.3m.

How Strong Is Bucher Industries' Balance Sheet?

The latest balance sheet data shows that Bucher Industries had liabilities of CHF794.9m due within a year, and liabilities of CHF92.4m falling due after that. Offsetting these obligations, it had cash of CHF371.4m as well as receivables valued at CHF646.9m due within 12 months. So it can boast CHF131.0m more liquid assets than total liabilities.

This short term liquidity is a sign that Bucher Industries could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Bucher Industries has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Bucher Industries

But the bad news is that Bucher Industries has seen its EBIT plunge 19% in the last twelve months. If that rate of decline in earnings continues, the company could find itself in a tight spot. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Bucher Industries 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. While Bucher Industries 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. Over the most recent three years, Bucher Industries recorded free cash flow worth 51% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While it is always sensible to investigate a company's debt, in this case Bucher Industries has CHF327.3m in net cash and a decent-looking balance sheet. So we are not troubled with Bucher Industries's debt use. Given Bucher Industries has a strong balance sheet is profitable and pays a dividend, it would be good to know how fast its dividends are growing, if at all. You can find out instantly by clicking this link.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.