Despite Lacking Profits Oscotec (KOSDAQ:039200) Seems To Be On Top Of Its Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Oscotec Inc. (KOSDAQ:039200) makes use of debt. But is this debt a concern to shareholders?

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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. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Oscotec's Debt?

As you can see below, Oscotec had ₩14.1b of debt at March 2025, down from ₩25.2b a year prior. However, its balance sheet shows it holds ₩128.1b in cash, so it actually has ₩114.0b net cash.

A Look At Oscotec's Liabilities

We can see from the most recent balance sheet that Oscotec had liabilities of ₩36.2b falling due within a year, and liabilities of ₩2.37b due beyond that. Offsetting these obligations, it had cash of ₩128.1b as well as receivables valued at ₩2.37b due within 12 months. So it actually has ₩91.8b more liquid assets than total liabilities.

This surplus suggests that Oscotec has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Oscotec has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Oscotec's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for Oscotec

Over 12 months, Oscotec reported revenue of ₩35b, which is a gain of 617%, although it did not report any earnings before interest and tax. That's virtually the hole-in-one of revenue growth!

So How Risky Is Oscotec?

While Oscotec lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of ₩385m. So taking that on face value, and considering the cash, we don't think its very risky in the near term. We think its revenue growth of 617% is a good sign. We'd see further strong growth as an optimistic indication. When we look at a riskier company, we like to check how their profits (or losses) are trending over time. Today, we're providing readers this interactive graph showing how Oscotec's profit, revenue, and operating cashflow have changed over the last few years.

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.