These 4 Measures Indicate That Logista Integral (BME:LOG) Is Using Debt Reasonably Well

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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Logista Integral, S.A. (BME:LOG) makes use of debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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.

How Much Debt Does Logista Integral Carry?

As you can see below, Logista Integral had €64.0m of debt at June 2025, down from €108.0m a year prior. However, it does have €2.37b in cash offsetting this, leading to net cash of €2.30b.

How Strong Is Logista Integral's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Logista Integral had liabilities of €7.24b due within 12 months and liabilities of €432.0m due beyond that. Offsetting this, it had €2.37b in cash and €2.32b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €2.98b.

This deficit is considerable relative to its market capitalization of €3.80b, 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

The good news is that Logista Integral has increased its EBIT by 2.8% over twelve months, which should ease any concerns about debt repayment. 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 Logista Integral 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 business needs free cash flow to pay off debt; accounting profits just don't cut it. While Logista Integral 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, Logista Integral generated free cash flow amounting to a very robust 96% of its EBIT, more than we'd expect. That positions it well to pay down debt if desirable to do so.

Summing Up

Although Logista Integral's balance sheet isn't particularly strong, due to the total liabilities, it is clearly positive to see that it has net cash of €2.30b. The cherry on top was that in converted 96% of that EBIT to free cash flow, bringing in €323m. So we don't have any problem with Logista Integral's use of debt. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Logista Integral (of which 1 shouldn't be ignored!) you should know about.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.