We Think NBT (KOSDAQ:236810) Has A Fair Chunk 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.' 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. As with many other companies NBT Inc. (KOSDAQ:236810) makes use of debt. But should shareholders be worried about its use of debt?

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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. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does NBT Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 NBT had ₩27.6b of debt, an increase on ₩24.1b, over one year. However, it does have ₩14.2b in cash offsetting this, leading to net debt of about ₩13.4b.

How Strong Is NBT's Balance Sheet?

According to the last reported balance sheet, NBT had liabilities of ₩26.2b due within 12 months, and liabilities of ₩22.0b due beyond 12 months. On the other hand, it had cash of ₩14.2b and ₩8.53b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩25.4b.

While this might seem like a lot, it is not so bad since NBT has a market capitalization of ₩58.4b, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since NBT will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for NBT

In the last year NBT had a loss before interest and tax, and actually shrunk its revenue by 4.6%, to ₩100b. We would much prefer see growth.

Caveat Emptor

Importantly, NBT had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩5.2b at the EBIT level. 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. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩328m in negative free cash flow over the last twelve months. So suffice it to say we do consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for NBT (of which 2 are concerning!) 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.

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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.