Is Asseco South Eastern Europe (WSE:ASE) A Risky Investment?

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. As with many other companies Asseco South Eastern Europe S.A. (WSE:ASE) makes use of debt. 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 usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Asseco South Eastern Europe's Debt?

The image below, which you can click on for greater detail, shows that Asseco South Eastern Europe had debt of zł168.3m at the end of September 2025, a reduction from zł193.8m over a year. But on the other hand it also has zł227.8m in cash, leading to a zł59.5m net cash position.

How Strong Is Asseco South Eastern Europe's Balance Sheet?

According to the last reported balance sheet, Asseco South Eastern Europe had liabilities of zł730.4m due within 12 months, and liabilities of zł287.8m due beyond 12 months. On the other hand, it had cash of zł227.8m and zł503.6m worth of receivables due within a year. So it has liabilities totalling zł286.9m more than its cash and near-term receivables, combined.

Given Asseco South Eastern Europe has a market capitalization of zł3.26b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Asseco South Eastern Europe boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Asseco South Eastern Europe

Asseco South Eastern Europe's EBIT was pretty flat over the last year, but that shouldn't be an issue given the it doesn't have a lot of debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Asseco South Eastern Europe's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Asseco South Eastern Europe 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, Asseco South Eastern Europe generated free cash flow amounting to a very robust 81% of its EBIT, more than we'd expect. That puts it in a very strong position to pay down debt.

Summing Up

We could understand if investors are concerned about Asseco South Eastern Europe's liabilities, but we can be reassured by the fact it has has net cash of zł59.5m. The cherry on top was that in converted 81% of that EBIT to free cash flow, bringing in zł215m. So is Asseco South Eastern Europe's debt a risk? It doesn't seem so to us. 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 Asseco South Eastern Europe is showing 1 warning sign in our investment analysis , you should know about...

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.