We Think Gielda Praw Majatkowych Vindexus Spolka Akcyjna (WSE:VIN) Can Manage Its Debt With Ease

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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 Gielda Praw Majatkowych Vindexus Spolka Akcyjna (WSE:VIN) makes use of debt. But should shareholders be worried about its use of debt?

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Gielda Praw Majatkowych Vindexus Spolka Akcyjna's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Gielda Praw Majatkowych Vindexus Spolka Akcyjna had zł127.5m of debt, an increase on zł87.5m, over one year. On the flip side, it has zł86.4m in cash leading to net debt of about zł41.1m.

How Healthy Is Gielda Praw Majatkowych Vindexus Spolka Akcyjna's Balance Sheet?

We can see from the most recent balance sheet that Gielda Praw Majatkowych Vindexus Spolka Akcyjna had liabilities of zł56.9m falling due within a year, and liabilities of zł106.5m due beyond that. On the other hand, it had cash of zł86.4m and zł323.9m worth of receivables due within a year. So it can boast zł246.9m more liquid assets than total liabilities.

This surplus strongly suggests that Gielda Praw Majatkowych Vindexus Spolka Akcyjna has a rock-solid balance sheet (and the debt is of no concern whatsoever). On this view, lenders should feel as safe as the beloved of a black-belt karate master.

Check out our latest analysis for Gielda Praw Majatkowych Vindexus Spolka Akcyjna

We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Looking at its net debt to EBITDA of 0.72 and interest cover of 4.3 times, it seems to us that Gielda Praw Majatkowych Vindexus Spolka Akcyjna is probably using debt in a pretty reasonable way. But the interest payments are certainly sufficient to have us thinking about how affordable its debt is. Notably, Gielda Praw Majatkowych Vindexus Spolka Akcyjna's EBIT launched higher than Elon Musk, gaining a whopping 170% on last year. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Gielda Praw Majatkowych Vindexus Spolka Akcyjna will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So we always check how much of that EBIT is translated into free cash flow. Looking at the most recent three years, Gielda Praw Majatkowych Vindexus Spolka Akcyjna recorded free cash flow of 39% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Our View

Gielda Praw Majatkowych Vindexus Spolka Akcyjna's EBIT growth rate suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14's goalkeeper. But, on a more sombre note, we are a little concerned by its interest cover. Considering this range of factors, it seems to us that Gielda Praw Majatkowych Vindexus Spolka Akcyjna is quite prudent with its debt, and the risks seem well managed. So we're not worried about the use of a little leverage on the balance sheet. 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. Be aware that Gielda Praw Majatkowych Vindexus Spolka Akcyjna is showing 2 warning signs in our investment analysis , you should know about...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.