Is ITEK (KOSDAQ:119830) Using Debt Sensibly?

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 can see that ITEK, Inc. (KOSDAQ:119830) does use debt in its business. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. 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, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is ITEK's Net Debt?

You can click the graphic below for the historical numbers, but it shows that ITEK had ₩29.5b of debt in June 2025, down from ₩47.2b, one year before. But it also has ₩101.1b in cash to offset that, meaning it has ₩71.6b net cash.

How Healthy Is ITEK's Balance Sheet?

We can see from the most recent balance sheet that ITEK had liabilities of ₩39.8b falling due within a year, and liabilities of ₩7.40b due beyond that. On the other hand, it had cash of ₩101.1b and ₩6.78b worth of receivables due within a year. So it can boast ₩60.7b more liquid assets than total liabilities.

This luscious liquidity implies that ITEK's balance sheet is sturdy like a giant sequoia tree. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that ITEK has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is ITEK'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.

Check out our latest analysis for ITEK

In the last year ITEK wasn't profitable at an EBIT level, but managed to grow its revenue by 18%, to ₩62b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is ITEK?

Although ITEK had an earnings before interest and tax (EBIT) loss over the last twelve months, it made a statutory profit of ₩3.5b. So taking that on face value, and considering the cash, we don't think its very risky in the near term. With mediocre revenue growth in the last year, we're don't find the investment opportunity particularly compelling. 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, we've discovered 1 warning sign for ITEK that you should be aware of before investing here.

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.