Is WISE Finance (WSE:IBS) A Risky Investment?

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.' 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 WISE Finance S.A. (WSE:IBS) does have debt on its balance sheet. 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. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is WISE Finance's Net Debt?

The chart below, which you can click on for greater detail, shows that WISE Finance had zł64.0m in debt in March 2025; about the same as the year before. However, it does have zł3.02m in cash offsetting this, leading to net debt of about zł60.9m.

How Healthy Is WISE Finance's Balance Sheet?

According to the last reported balance sheet, WISE Finance had liabilities of zł41.5m due within 12 months, and liabilities of zł32.2m due beyond 12 months. Offsetting this, it had zł3.02m in cash and zł77.6m in receivables that were due within 12 months. So it actually has zł6.94m more liquid assets than total liabilities.

This excess liquidity suggests that WISE Finance is taking a careful approach to debt. Due to its strong net asset position, it is not likely to face issues with its lenders. The balance sheet is clearly the area to focus on when you are analysing debt. But it is WISE Finance's earnings that will influence how the balance sheet holds up in the future. 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.

Check out our latest analysis for WISE Finance

Over 12 months, WISE Finance reported revenue of zł23m, which is a gain of 38%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

Caveat Emptor

While we can certainly appreciate WISE Finance's revenue growth, its earnings before interest and tax (EBIT) loss is not ideal. Indeed, it lost zł691k at the EBIT level. On a more positive note, the company does have liquid assets, so it has a bit of time to improve its operations before the debt becomes an acute problem. And the cherry on top is that its actual free cash flow was zł14m with statutory profit coming in at zł1.5m. So it seems too risky for our taste. 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 4 warning signs for WISE Finance (1 can'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.