We Think Ceragon Networks (NASDAQ:CRNT) Can Stay On Top Of Its Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Ceragon Networks Ltd. (NASDAQ:CRNT) does have debt on its balance sheet. 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. 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. 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 Ceragon Networks Carry?

The image below, which you can click on for greater detail, shows that Ceragon Networks had debt of US$20.5m at the end of June 2025, a reduction from US$28.5m over a year. However, it does have US$29.2m in cash offsetting this, leading to net cash of US$8.72m.

A Look At Ceragon Networks' Liabilities

We can see from the most recent balance sheet that Ceragon Networks had liabilities of US$125.9m falling due within a year, and liabilities of US$30.7m due beyond that. Offsetting this, it had US$29.2m in cash and US$142.7m in receivables that were due within 12 months. So it can boast US$15.3m more liquid assets than total liabilities.

This short term liquidity is a sign that Ceragon Networks could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Ceragon Networks boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Ceragon Networks

The good news is that Ceragon Networks has increased its EBIT by 6.7% over twelve months, which should ease any concerns about debt repayment. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Ceragon Networks can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Ceragon Networks 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. Looking at the most recent three years, Ceragon Networks recorded free cash flow of 38% of its EBIT, which is weaker than we'd expect. That weak cash conversion makes it more difficult to handle indebtedness.

Summing Up

While it is always sensible to investigate a company's debt, in this case Ceragon Networks has US$8.72m in net cash and a decent-looking balance sheet. And it also grew its EBIT by 6.7% over the last year. So we don't have any problem with Ceragon Networks'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. To that end, you should be aware of the 1 warning sign we've spotted with Ceragon Networks .

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.