Health Check: How Prudently Does DUKSAN TECHOPIALtd (KOSDAQ:317330) Use Debt?

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. Importantly, DUKSAN TECHOPIA Co.,Ltd. (KOSDAQ:317330) does carry debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is DUKSAN TECHOPIALtd's Debt?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 DUKSAN TECHOPIALtd had ₩275.8b of debt, an increase on ₩212.2b, over one year. However, it does have ₩127.8b in cash offsetting this, leading to net debt of about ₩148.0b.

How Strong Is DUKSAN TECHOPIALtd's Balance Sheet?

The latest balance sheet data shows that DUKSAN TECHOPIALtd had liabilities of ₩343.5b due within a year, and liabilities of ₩129.1b falling due after that. Offsetting these obligations, it had cash of ₩127.8b as well as receivables valued at ₩11.3b due within 12 months. So it has liabilities totalling ₩333.4b more than its cash and near-term receivables, combined.

When you consider that this deficiency exceeds the company's ₩330.1b market capitalization, you might well be inclined to review the balance sheet intently. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since DUKSAN TECHOPIALtd will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

View our latest analysis for DUKSAN TECHOPIALtd

Over 12 months, DUKSAN TECHOPIALtd made a loss at the EBIT level, and saw its revenue drop to ₩94b, which is a fall of 6.1%. That's not what we would hope to see.

Caveat Emptor

Over the last twelve months DUKSAN TECHOPIALtd produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping ₩35b. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of ₩63b over the last twelve months. That means it's on the risky side of things. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 3 warning signs for DUKSAN TECHOPIALtd (2 shouldn't be ignored) you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.