Does EO Technics (KOSDAQ:039030) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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. Importantly, EO Technics Co., Ltd. (KOSDAQ:039030) does carry debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

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. 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. 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 thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does EO Technics Carry?

The chart below, which you can click on for greater detail, shows that EO Technics had ₩9.00b in debt in June 2025; about the same as the year before. But on the other hand it also has ₩242.5b in cash, leading to a ₩233.5b net cash position.

How Strong Is EO Technics' Balance Sheet?

We can see from the most recent balance sheet that EO Technics had liabilities of ₩71.1b falling due within a year, and liabilities of ₩2.02b due beyond that. Offsetting this, it had ₩242.5b in cash and ₩91.1b in receivables that were due within 12 months. So it can boast ₩260.5b more liquid assets than total liabilities.

This short term liquidity is a sign that EO Technics could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, EO Technics boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for EO Technics

Even more impressive was the fact that EO Technics grew its EBIT by 155% over twelve months. That boost will make it even easier to pay down debt going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if EO Technics can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While EO Technics has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the last three years, EO Technics recorded free cash flow worth a fulsome 93% of its EBIT, which is stronger than we'd usually expect. That positions it well to pay down debt if desirable to do so.

Summing Up

While it is always sensible to investigate a company's debt, in this case EO Technics has ₩233.5b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₩20b, being 93% of its EBIT. So we don't think EO Technics's use of debt is risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of EO Technics's earnings per share history for free.

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.