Health Check: How Prudently Does Autech (KOSDAQ:067170) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Autech Corporation (KOSDAQ:067170) makes use of debt. But should shareholders be worried about its use of debt?

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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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Autech's Net Debt?

The chart below, which you can click on for greater detail, shows that Autech had ₩271.1b in debt in September 2025; about the same as the year before. However, because it has a cash reserve of ₩113.1b, its net debt is less, at about ₩158.0b.

A Look At Autech's Liabilities

Zooming in on the latest balance sheet data, we can see that Autech had liabilities of ₩418.9b due within 12 months and liabilities of ₩64.1b due beyond that. On the other hand, it had cash of ₩113.1b and ₩270 worth of receivables due within a year. So its liabilities total ₩369.8b more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the ₩55.2b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. At the end of the day, Autech would probably need a major re-capitalization if its creditors were to demand repayment. When analysing debt levels, the balance sheet is the obvious place to start. But it is Autech's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Autech

In the last year Autech had a loss before interest and tax, and actually shrunk its revenue by 4.1%, to ₩889b. That's not what we would hope to see.

Caveat Emptor

Importantly, Autech had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable ₩11b at the EBIT level. When you combine this with the very significant balance sheet liabilities mentioned above, we are so wary of it that we are basically at a loss for the right words. Sure, the company might have a nice story about how they are going on to a brighter future. But the fact is that it incinerated ₩1.0b of cash in the last twelve months, and has precious few liquid assets in comparison to its liabilities. 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. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Autech (of which 2 are significant!) you should know about.

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.

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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.