Would Naturalendo Tech (KOSDAQ:168330) Be Better Off With Less Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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. We note that Naturalendo Tech Co., Ltd. (KOSDAQ:168330) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Naturalendo Tech's Debt?

The image below, which you can click on for greater detail, shows that at June 2025 Naturalendo Tech had debt of ₩5.63b, up from ₩2.26b in one year. On the flip side, it has ₩1.99b in cash leading to net debt of about ₩3.64b.

How Healthy Is Naturalendo Tech's Balance Sheet?

We can see from the most recent balance sheet that Naturalendo Tech had liabilities of ₩6.12b falling due within a year, and liabilities of ₩3.66b due beyond that. On the other hand, it had cash of ₩1.99b and ₩1.91b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩5.88b.

Of course, Naturalendo Tech has a market capitalization of ₩69.9b, 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. When analysing debt levels, the balance sheet is the obvious place to start. But it is Naturalendo Tech's earnings that will influence how the balance sheet holds up in the future. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Check out our latest analysis for Naturalendo Tech

In the last year Naturalendo Tech wasn't profitable at an EBIT level, but managed to grow its revenue by 3.4%, to ₩23b. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Naturalendo Tech had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩3.7b. 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. However, it doesn't help that it burned through ₩3.5b of cash over the last year. So suffice it to say we consider the stock very risky. 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 2 warning signs for Naturalendo Tech (1 makes us a bit uncomfortable) you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.