Health Check: How Prudently Does WITHTECH (KOSDAQ:348350) 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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that WITHTECH Co., LTD. (KOSDAQ:348350) does use debt in its business. But the real question is whether this debt is making the company risky.

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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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest 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 WITHTECH Carry?

The chart below, which you can click on for greater detail, shows that WITHTECH had ₩13.4b in debt in March 2025; about the same as the year before. However, its balance sheet shows it holds ₩76.6b in cash, so it actually has ₩63.2b net cash.

A Look At WITHTECH's Liabilities

Zooming in on the latest balance sheet data, we can see that WITHTECH had liabilities of ₩25.3b due within 12 months and liabilities of ₩227.4m due beyond that. On the other hand, it had cash of ₩76.6b and ₩4.25b worth of receivables due within a year. So it actually has ₩55.3b more liquid assets than total liabilities.

This excess liquidity is a great indication that WITHTECH's balance sheet is almost as strong as Fort Knox. On this view, lenders should feel as safe as the beloved of a black-belt karate master. Simply put, the fact that WITHTECH 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 WITHTECH's earnings that will influence how the balance sheet holds up in the future. 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 WITHTECH

In the last year WITHTECH had a loss before interest and tax, and actually shrunk its revenue by 8.1%, to ₩44b. That's not what we would hope to see.

So How Risky Is WITHTECH?

While WITHTECH lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of ₩3.4b. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. There's no doubt the next few years will be crucial to how the business matures. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 4 warning signs for WITHTECH (2 are a bit unpleasant) 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.