Is Carriesoft (KOSDAQ:317530) Using Too Much Debt?

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 might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Carriesoft Co., Ltd. (KOSDAQ:317530) does have debt on its balance sheet. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Carriesoft's Debt?

The chart below, which you can click on for greater detail, shows that Carriesoft had ₩5.75b in debt in September 2025; about the same as the year before. On the flip side, it has ₩1.00b in cash leading to net debt of about ₩4.74b.

How Strong Is Carriesoft's Balance Sheet?

We can see from the most recent balance sheet that Carriesoft had liabilities of ₩7.15b falling due within a year, and liabilities of ₩1.60b due beyond that. Offsetting these obligations, it had cash of ₩1.00b as well as receivables valued at ₩1.09b due within 12 months. So it has liabilities totalling ₩6.66b more than its cash and near-term receivables, combined.

Of course, Carriesoft has a market capitalization of ₩45.2b, so these liabilities are probably manageable. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Carriesoft'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 Carriesoft

Over 12 months, Carriesoft made a loss at the EBIT level, and saw its revenue drop to ₩5.6b, which is a fall of 8.2%. That's not what we would hope to see.

Caveat Emptor

Importantly, Carriesoft had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩3.1b 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. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled ₩3.0b in negative free cash flow over the last twelve months. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 4 warning signs for Carriesoft (2 are a bit unpleasant) you should be aware of.

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.