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These 4 Measures Indicate That TAT Technologies (NASDAQ:TATT) Is Using Debt Reasonably Well

Simply Wall St · 3d ago

Warren Buffett famously said, '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. Importantly, TAT Technologies Ltd. (NASDAQ:TATT) does carry debt. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is TAT Technologies's Debt?

You can click the graphic below for the historical numbers, but it shows that TAT Technologies had US$12.0m of debt in September 2025, down from US$16.1m, one year before. But it also has US$47.1m in cash to offset that, meaning it has US$35.1m net cash.

debt-equity-history-analysis
NasdaqGM:TATT Debt to Equity History January 6th 2026

A Look At TAT Technologies' Liabilities

The latest balance sheet data shows that TAT Technologies had liabilities of US$37.1m due within a year, and liabilities of US$16.3m falling due after that. Offsetting this, it had US$47.1m in cash and US$33.3m in receivables that were due within 12 months. So it can boast US$27.0m more liquid assets than total liabilities.

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

See our latest analysis for TAT Technologies

In addition to that, we're happy to report that TAT Technologies has boosted its EBIT by 81%, thus reducing the spectre of future debt repayments. 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 TAT Technologies 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, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While TAT Technologies 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. Over the last three years, TAT Technologies saw substantial negative free cash flow, in total. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that TAT Technologies has net cash of US$35.1m, as well as more liquid assets than liabilities. And we liked the look of last year's 81% year-on-year EBIT growth. So we don't have any problem with TAT Technologies's use of debt. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 1 warning sign for TAT Technologies you should be aware of.

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.