Is Inics (KOSDAQ:452400) Using Debt In A Risky Way?

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 can see that Inics Corp. (KOSDAQ:452400) does use debt in its business. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Inics's Debt?

As you can see below, at the end of June 2025, Inics had ₩4.20b of debt, up from ₩3.00b a year ago. Click the image for more detail. However, its balance sheet shows it holds ₩31.7b in cash, so it actually has ₩27.5b net cash.

How Strong Is Inics' Balance Sheet?

According to the last reported balance sheet, Inics had liabilities of ₩18.1b due within 12 months, and liabilities of ₩433.3m due beyond 12 months. Offsetting these obligations, it had cash of ₩31.7b as well as receivables valued at ₩21.3b due within 12 months. So it can boast ₩34.5b more liquid assets than total liabilities.

This surplus strongly suggests that Inics has a rock-solid balance sheet (and the debt is of no concern whatsoever). On this view, lenders should feel as safe as the beloved of a black-belt karate master. Simply put, the fact that Inics has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Inics will need earnings to service that debt. 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 Inics

In the last year Inics wasn't profitable at an EBIT level, but managed to grow its revenue by 13%, to ₩117b. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Inics?

Although Inics had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of ₩831m. So taking that on face value, and considering the cash, we don't think its very risky in the near term. We'll feel more comfortable with the stock once EBIT is positive, given the lacklustre revenue growth. 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. Be aware that Inics is showing 5 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.