Would ENVIONEERLtd (KOSDAQ:317870) Be Better Off With Less Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies ENVIONEER Co.,Ltd. (KOSDAQ:317870) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does ENVIONEERLtd Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 ENVIONEERLtd had ₩22.8b of debt, an increase on ₩9.76b, over one year. On the flip side, it has ₩17.2b in cash leading to net debt of about ₩5.56b.

How Strong Is ENVIONEERLtd's Balance Sheet?

We can see from the most recent balance sheet that ENVIONEERLtd had liabilities of ₩29.3b falling due within a year, and liabilities of ₩10.3b due beyond that. Offsetting this, it had ₩17.2b in cash and ₩1.63b in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩20.8b.

Since publicly traded ENVIONEERLtd shares are worth a total of ₩116.1b, it seems unlikely that this level of liabilities would be a major 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 ENVIONEERLtd 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 ENVIONEERLtd

Over 12 months, ENVIONEERLtd made a loss at the EBIT level, and saw its revenue drop to ₩12b, which is a fall of 13%. We would much prefer see growth.

Caveat Emptor

While ENVIONEERLtd's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. To be specific the EBIT loss came in at ₩4.9b. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩16b in negative free cash flow over the last twelve months. So in short it's a really risky stock. 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 2 warning signs for ENVIONEERLtd (1 is a bit unpleasant) 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.