Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Wayside Technology Group, Inc. (NASDAQ:WSTG) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

What Risk Does Debt Bring?

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. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

View our latest analysis for Wayside Technology Group

How Much Debt Does Wayside Technology Group Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2022 Wayside Technology Group had US$2.07m of debt, an increase on none, over one year. However, it does have US$29.3m in cash offsetting this, leading to net cash of US$27.3m.

How Healthy Is Wayside Technology Group's Balance Sheet?

The latest balance sheet data shows that Wayside Technology Group had liabilities of US$119.9m due within a year, and liabilities of US$4.69m falling due after that. Offsetting this, it had US$29.3m in cash and US$115.0m in receivables that were due within 12 months. So it actually has US$19.7m more liquid assets than total liabilities.

It's good to see that Wayside Technology Group has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Due to its strong net asset position, it is not likely to face issues with its lenders. Simply put, the fact that Wayside Technology Group has more cash than debt is arguably a good indication that it can manage its debt safely.

In addition to that, we're happy to report that Wayside Technology Group has boosted its EBIT by 68%, thus reducing the spectre of future debt repayments. When analysing debt levels, the balance sheet is the obvious place to start. But it is Wayside Technology Group'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.