Health Check: How Prudently Does GI Innovation (KOSDAQ:358570) Use Debt?

Warren Buffett famously said, '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. Importantly, GI Innovation, Inc. (KOSDAQ:358570) does carry debt. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does GI Innovation Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 GI Innovation had ₩9.36b of debt, an increase on none, over one year. However, its balance sheet shows it holds ₩51.3b in cash, so it actually has ₩41.9b net cash.

How Strong Is GI Innovation's Balance Sheet?

According to the last reported balance sheet, GI Innovation had liabilities of ₩14.4b due within 12 months, and liabilities of ₩3.10b due beyond 12 months. Offsetting this, it had ₩51.3b in cash and ₩7.35b in receivables that were due within 12 months. So it actually has ₩41.2b more liquid assets than total liabilities.

This surplus suggests that GI Innovation has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, GI Innovation boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is GI Innovation'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 GI Innovation

Over 12 months, GI Innovation made a loss at the EBIT level, and saw its revenue drop to ₩338m, which is a fall of 93%. That makes us nervous, to say the least.

So How Risky Is GI Innovation?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that GI Innovation had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩49b of cash and made a loss of ₩57b. However, it has net cash of ₩41.9b, so it has a bit of time before it will need more capital. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example GI Innovation has 3 warning signs (and 2 which are significant) we think you should know about.

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.