Is Korea Robot ManufacturingLtd (KOSDAQ:093640) Using Debt Sensibly?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Korea Robot Manufacturing Co.,Ltd. (KOSDAQ:093640) makes use of debt. But the more important question is: how much risk is that debt creating?

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 Korea Robot ManufacturingLtd's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Korea Robot ManufacturingLtd had ₩35.9b of debt in March 2025, down from ₩109.8b, one year before. But on the other hand it also has ₩54.1b in cash, leading to a ₩18.2b net cash position.

How Healthy Is Korea Robot ManufacturingLtd's Balance Sheet?

According to the last reported balance sheet, Korea Robot ManufacturingLtd had liabilities of ₩37.8b due within 12 months, and liabilities of ₩421.5m due beyond 12 months. On the other hand, it had cash of ₩54.1b and ₩1.28b worth of receivables due within a year. So it actually has ₩17.2b more liquid assets than total liabilities.

This surplus suggests that Korea Robot ManufacturingLtd has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Korea Robot ManufacturingLtd has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Korea Robot ManufacturingLtd will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Korea Robot ManufacturingLtd

Over 12 months, Korea Robot ManufacturingLtd made a loss at the EBIT level, and saw its revenue drop to ₩10b, which is a fall of 10%. That's not what we would hope to see.

So How Risky Is Korea Robot ManufacturingLtd?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year Korea Robot ManufacturingLtd had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩9.8b of cash and made a loss of ₩22b. But the saving grace is the ₩18.2b on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. We've identified 1 warning sign with Korea Robot ManufacturingLtd , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.