We Think Edge FoundryLtd (KOSDAQ:105550) Has A Fair Chunk Of Debt

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. As with many other companies Edge Foundry Co.,Ltd (KOSDAQ:105550) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Edge FoundryLtd's Net Debt?

As you can see below, at the end of June 2025, Edge FoundryLtd had ₩31.9b of debt, up from ₩22.0b a year ago. Click the image for more detail. On the flip side, it has ₩17.9b in cash leading to net debt of about ₩14.0b.

How Healthy Is Edge FoundryLtd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Edge FoundryLtd had liabilities of ₩60.9b due within 12 months and liabilities of ₩3.75b due beyond that. Offsetting these obligations, it had cash of ₩17.9b as well as receivables valued at ₩33.1b due within 12 months. So its liabilities total ₩13.7b more than the combination of its cash and short-term receivables.

Given Edge FoundryLtd has a market capitalization of ₩155.8b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Edge FoundryLtd'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.

See our latest analysis for Edge FoundryLtd

In the last year Edge FoundryLtd's revenue was pretty flat, and it made a negative EBIT. While that's not too bad, we'd prefer see growth.

Caveat Emptor

Importantly, Edge FoundryLtd had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩11b. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled ₩13b in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very risky. 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. We've identified 2 warning signs with Edge FoundryLtd (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.