EVERYBOT (KOSDAQ:270660) Is Carrying A Fair Bit Of 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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that EVERYBOT Inc. (KOSDAQ:270660) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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.

How Much Debt Does EVERYBOT Carry?

The image below, which you can click on for greater detail, shows that at December 2024 EVERYBOT had debt of ₩37.3b, up from ₩18.3b in one year. However, it does have ₩25.0b in cash offsetting this, leading to net debt of about ₩12.3b.

How Healthy Is EVERYBOT's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that EVERYBOT had liabilities of ₩39.9b due within 12 months and liabilities of ₩10.9b due beyond that. Offsetting this, it had ₩25.0b in cash and ₩7.06b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩18.8b.

Given EVERYBOT has a market capitalization of ₩202.9b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if EVERYBOT can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for EVERYBOT

Over 12 months, EVERYBOT made a loss at the EBIT level, and saw its revenue drop to ₩30b, which is a fall of 6.1%. We would much prefer see growth.

Caveat Emptor

Importantly, EVERYBOT had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩2.2b. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through ₩17b of cash over the last year. So suffice it to say we consider the stock very risky. 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. To that end, you should learn about the 3 warning signs we've spotted with EVERYBOT (including 1 which is significant) .

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.