NEXTURN&ROLLKOREA (KOSDAQ:089140) Has Debt But No Earnings; Should You Worry?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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, NEXTURN&ROLLKOREA Co., Ltd (KOSDAQ:089140) does carry debt. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. 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 think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does NEXTURN&ROLLKOREA Carry?

As you can see below, at the end of June 2025, NEXTURN&ROLLKOREA had ₩91.3b of debt, up from ₩83.8b a year ago. Click the image for more detail. However, it also had ₩54.1b in cash, and so its net debt is ₩37.2b.

How Strong Is NEXTURN&ROLLKOREA's Balance Sheet?

We can see from the most recent balance sheet that NEXTURN&ROLLKOREA had liabilities of ₩95.7b falling due within a year, and liabilities of ₩24.9b due beyond that. Offsetting this, it had ₩54.1b in cash and ₩11.2b in receivables that were due within 12 months. So its liabilities total ₩55.3b more than the combination of its cash and short-term receivables.

The deficiency here weighs heavily on the ₩35.7b 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'd watch its balance sheet closely, without a doubt. At the end of the day, NEXTURN&ROLLKOREA would probably need a major re-capitalization if its creditors were to demand repayment. The balance sheet is clearly the area to focus on when you are analysing debt. But it is NEXTURN&ROLLKOREA'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.

Check out our latest analysis for NEXTURN&ROLLKOREA

In the last year NEXTURN&ROLLKOREA wasn't profitable at an EBIT level, but managed to grow its revenue by 4.6%, to ₩38b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, NEXTURN&ROLLKOREA had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩3.6m. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. It's fair to say the loss of ₩515m didn't encourage us either; we'd like to see a profit. And until that time we think this is a risky stock. 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. For example, we've discovered 3 warning signs for NEXTURN&ROLLKOREA (1 is concerning!) that you should be aware of before investing here.

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.