Health Check: How Prudently Does JEIO (KOSDAQ:418550) Use Debt?

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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies JEIO Co., Ltd. (KOSDAQ:418550) makes use of debt. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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.

How Much Debt Does JEIO Carry?

As you can see below, JEIO had ₩29.3b of debt at June 2025, down from ₩31.9b a year prior. But it also has ₩37.2b in cash to offset that, meaning it has ₩7.91b net cash.

A Look At JEIO's Liabilities

The latest balance sheet data shows that JEIO had liabilities of ₩13.9b due within a year, and liabilities of ₩28.2b falling due after that. Offsetting these obligations, it had cash of ₩37.2b as well as receivables valued at ₩9.56b due within 12 months. So it actually has ₩4.69b more liquid assets than total liabilities.

This surplus suggests that JEIO has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, JEIO boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since JEIO 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.

View our latest analysis for JEIO

In the last year JEIO had a loss before interest and tax, and actually shrunk its revenue by 41%, to ₩65b. That makes us nervous, to say the least.

So How Risky Is JEIO?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that JEIO had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩22b of cash and made a loss of ₩14b. With only ₩7.91b on the balance sheet, it would appear that its going to need to raise capital again soon. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. When we look at a riskier company, we like to check how their profits (or losses) are trending over time. Today, we're providing readers this interactive graph showing how JEIO's profit, revenue, and operating cashflow have changed over the last few years.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.