Is CAMUS ENGINEERING & CONSTRUCTION (KRX:013700) Using Too Much Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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. We note that CAMUS ENGINEERING & CONSTRUCTION Inc. (KRX:013700) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is CAMUS ENGINEERING & CONSTRUCTION's Debt?

You can click the graphic below for the historical numbers, but it shows that CAMUS ENGINEERING & CONSTRUCTION had ₩94.3b of debt in June 2025, down from ₩108.6b, one year before. On the flip side, it has ₩16.8b in cash leading to net debt of about ₩77.5b.

How Strong Is CAMUS ENGINEERING & CONSTRUCTION's Balance Sheet?

The latest balance sheet data shows that CAMUS ENGINEERING & CONSTRUCTION had liabilities of ₩144.9b due within a year, and liabilities of ₩38.8b falling due after that. Offsetting these obligations, it had cash of ₩16.8b as well as receivables valued at ₩76.7b due within 12 months. So it has liabilities totalling ₩90.2b more than its cash and near-term receivables, combined.

Given this deficit is actually higher than the company's market capitalization of ₩66.8b, we think shareholders really should watch CAMUS ENGINEERING & CONSTRUCTION's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But it is CAMUS ENGINEERING & CONSTRUCTION'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 CAMUS ENGINEERING & CONSTRUCTION

In the last year CAMUS ENGINEERING & CONSTRUCTION had a loss before interest and tax, and actually shrunk its revenue by 12%, to ₩250b. We would much prefer see growth.

Caveat Emptor

Not only did CAMUS ENGINEERING & CONSTRUCTION's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at ₩4.3b. 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. For example, we would not want to see a repeat of last year's loss of ₩9.4b. In the meantime, we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 3 warning signs for CAMUS ENGINEERING & CONSTRUCTION (1 is significant) you should be aware of.

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.