Is Warimpex Finanz- und Beteiligungs (VIE:WXF) Using Too Much 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. Importantly, Warimpex Finanz- und Beteiligungs AG (VIE:WXF) 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 is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. 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 Warimpex Finanz- und Beteiligungs's Debt?

You can click the graphic below for the historical numbers, but it shows that Warimpex Finanz- und Beteiligungs had €146.6m of debt in September 2025, down from €154.6m, one year before. However, it also had €3.05m in cash, and so its net debt is €143.5m.

How Strong Is Warimpex Finanz- und Beteiligungs' Balance Sheet?

According to the last reported balance sheet, Warimpex Finanz- und Beteiligungs had liabilities of €19.9m due within 12 months, and liabilities of €147.0m due beyond 12 months. Offsetting this, it had €3.05m in cash and €4.09m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €159.8m.

The deficiency here weighs heavily on the €26.0m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. After all, Warimpex Finanz- und Beteiligungs would likely require a major re-capitalisation if it had to pay its creditors today. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Warimpex Finanz- und Beteiligungs'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.

View our latest analysis for Warimpex Finanz- und Beteiligungs

In the last year Warimpex Finanz- und Beteiligungs had a loss before interest and tax, and actually shrunk its revenue by 68%, to €17m. To be frank that doesn't bode well.

Caveat Emptor

While Warimpex Finanz- und Beteiligungs's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Indeed, it lost a very considerable €4.2m at the EBIT level. Reflecting on this and the significant total liabilities, it's hard to know what to say about the stock because of our intense dis-affinity for it. Sure, the company might have a nice story about how they are going on to a brighter future. But the reality is that it is low on liquid assets relative to liabilities, and it burned through €1.4m in the last year. So is this a high risk stock? We think so, and we'd avoid it. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. Be aware that Warimpex Finanz- und Beteiligungs is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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.