Is ADTechnologyLtd (KOSDAQ:200710) Using Debt Sensibly?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We note that ADTechnology Co.,Ltd. (KOSDAQ:200710) does have debt on its balance sheet. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is ADTechnologyLtd's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 ADTechnologyLtd had debt of ₩68.6b, up from ₩61.0b in one year. However, it does have ₩70.9b in cash offsetting this, leading to net cash of ₩2.26b.

How Strong Is ADTechnologyLtd's Balance Sheet?

The latest balance sheet data shows that ADTechnologyLtd had liabilities of ₩88.2b due within a year, and liabilities of ₩35.2b falling due after that. Offsetting this, it had ₩70.9b in cash and ₩8.96b in receivables that were due within 12 months. So it has liabilities totalling ₩43.5b more than its cash and near-term receivables, combined.

Of course, ADTechnologyLtd has a market capitalization of ₩287.6b, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, ADTechnologyLtd also has more cash than debt, so we're pretty confident it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since ADTechnologyLtd 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.

See our latest analysis for ADTechnologyLtd

Over 12 months, ADTechnologyLtd reported revenue of ₩122b, which is a gain of 8.8%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is ADTechnologyLtd?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months ADTechnologyLtd lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through ₩32b of cash and made a loss of ₩18b. But at least it has ₩2.26b on the balance sheet to spend on growth, near-term. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For example ADTechnologyLtd has 2 warning signs (and 1 which can't be ignored) we think you should know about.

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.