Logista Integral (BME:LOG) Has A Pretty Healthy Balance Sheet

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 note that Logista Integral, S.A. (BME:LOG) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Logista Integral Carry?

As you can see below, at the end of March 2025, Logista Integral had €6.20m of debt, up from €3.59m a year ago. Click the image for more detail. However, it does have €174.0m in cash offsetting this, leading to net cash of €167.8m.

A Look At Logista Integral's Liabilities

We can see from the most recent balance sheet that Logista Integral had liabilities of €6.30b falling due within a year, and liabilities of €442.4m due beyond that. Offsetting these obligations, it had cash of €174.0m as well as receivables valued at €3.53b due within 12 months. So it has liabilities totalling €3.03b more than its cash and near-term receivables, combined.

This deficit is considerable relative to its market capitalization of €3.75b, so it does suggest shareholders should keep an eye on Logista Integral's use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. While it does have liabilities worth noting, Logista Integral also has more cash than debt, so we're pretty confident it can manage its debt safely.

Check out our latest analysis for Logista Integral

Fortunately, Logista Integral grew its EBIT by 6.6% in the last year, making that debt load look even more manageable. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Logista Integral'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.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Logista Integral 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. During the last three years, Logista Integral produced sturdy free cash flow equating to 75% 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 Logista Integral does have more liabilities than liquid assets, it also has net cash of €167.8m. And it impressed us with free cash flow of €323m, being 75% of its EBIT. So we are not troubled with Logista Integral's debt use. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 2 warning signs for Logista Integral (1 shouldn't be ignored) you should be aware of.

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.