We're Not Very Worried About ESTaid's (KOSDAQ:239340) Cash Burn Rate

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.

Given this risk, we thought we'd take a look at whether ESTaid (KOSDAQ:239340) shareholders should be worried about its cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. First, we'll determine its cash runway by comparing its cash burn with its cash reserves.

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How Long Is ESTaid's Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at March 2025, ESTaid had cash of ₩32b and no debt. In the last year, its cash burn was ₩4.5b. That means it had a cash runway of about 7.1 years as of March 2025. While this is only one measure of its cash burn situation, it certainly gives us the impression that holders have nothing to worry about. The image below shows how its cash balance has been changing over the last few years.

Check out our latest analysis for ESTaid

How Well Is ESTaid Growing?

At first glance it's a bit worrying to see that ESTaid actually boosted its cash burn by 43%, year on year. The silver lining is that revenue was up 22%, showing the business is growing at the top line. On balance, we'd say the company is improving over time. In reality, this article only makes a short study of the company's growth data. You can take a look at how ESTaid has developed its business over time by checking this visualization of its revenue and earnings history.

Can ESTaid Raise More Cash Easily?

While ESTaid seems to be in a decent position, we reckon it is still worth thinking about how easily it could raise more cash, if that proved desirable. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

Since it has a market capitalisation of ₩65b, ESTaid's ₩4.5b in cash burn equates to about 6.9% of its market value. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.

Is ESTaid's Cash Burn A Worry?

As you can probably tell by now, we're not too worried about ESTaid's cash burn. For example, we think its cash runway suggests that the company is on a good path. While its increasing cash burn wasn't great, the other factors mentioned in this article more than make up for weakness on that measure. Considering all the factors discussed in this article, we're not overly concerned about the company's cash burn, although we do think shareholders should keep an eye on how it develops. On another note, ESTaid has 3 warning signs (and 2 which are significant) we think you should know about.

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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.