We Think ONTIDE (KRX:005320) Has A Fair Chunk Of Debt

Simply Wall St

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 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. We note that ONTIDE Corp. (KRX:005320) does have debt on its balance sheet. But is this debt a concern to shareholders?

Our free stock report includes 2 warning signs investors should be aware of before investing in ONTIDE. Read for free now.

Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. 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. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does ONTIDE Carry?

You can click the graphic below for the historical numbers, but it shows that ONTIDE had ₩22.7b of debt in December 2024, down from ₩23.8b, one year before. However, it also had ₩19.6b in cash, and so its net debt is ₩3.08b.

KOSE:A005320 Debt to Equity History May 16th 2025

How Healthy Is ONTIDE's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that ONTIDE had liabilities of ₩40.9b due within 12 months and liabilities of ₩9.52b due beyond that. On the other hand, it had cash of ₩19.6b and ₩31.8b worth of receivables due within a year. So its total liabilities are just about perfectly matched by its shorter-term, liquid assets.

This short term liquidity is a sign that ONTIDE could probably pay off its debt with ease, as its balance sheet is far from stretched. The balance sheet is clearly the area to focus on when you are analysing debt. But it is ONTIDE'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 ONTIDE

In the last year ONTIDE wasn't profitable at an EBIT level, but managed to grow its revenue by 18%, to ₩266b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Over the last twelve months ONTIDE produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable ₩4.3b at the EBIT level. On a more positive note, the company does have liquid assets, so it has a bit of time to improve its operations before the debt becomes an acute problem. Still, we'd be more encouraged to study the business in depth if it already had some free cash flow. This one is a bit too risky for our liking. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example ONTIDE has 2 warning signs (and 1 which is significant) we think you should know about.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

Valuation is complex, but we're here to simplify it.

Discover if ONTIDE might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.