Orbitech (KOSDAQ:046120) Is Making Moderate Use Of Debt

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says '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. Importantly, Orbitech Co., Ltd. (KOSDAQ:046120) does carry debt. But is this debt a concern to shareholders?

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When Is Debt A Problem?

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 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, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Orbitech's Debt?

You can click the graphic below for the historical numbers, but it shows that Orbitech had ₩28.1b of debt in June 2025, down from ₩31.0b, one year before. However, because it has a cash reserve of ₩4.34b, its net debt is less, at about ₩23.8b.

A Look At Orbitech's Liabilities

According to the last reported balance sheet, Orbitech had liabilities of ₩33.3b due within 12 months, and liabilities of ₩13.8b due beyond 12 months. On the other hand, it had cash of ₩4.34b and ₩25.4b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩17.4b.

Of course, Orbitech has a market capitalization of ₩96.1b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Orbitech 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 Orbitech

Over 12 months, Orbitech made a loss at the EBIT level, and saw its revenue drop to ₩62b, which is a fall of 7.3%. We would much prefer see growth.

Caveat Emptor

Over the last twelve months Orbitech produced an earnings before interest and tax (EBIT) loss. To be specific the EBIT loss came in at ₩5.4b. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled ₩5.0b in negative free cash flow over the last twelve months. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 3 warning signs for Orbitech (1 is a bit concerning) you should be aware of.

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.