Does MICRO2NANO (KOSDAQ:424980) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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 MICRO2NANO, Inc. (KOSDAQ:424980) makes use of debt. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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 usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is MICRO2NANO's Debt?

The image below, which you can click on for greater detail, shows that MICRO2NANO had debt of ₩11.6b at the end of June 2025, a reduction from ₩14.2b over a year. However, it does have ₩17.4b in cash offsetting this, leading to net cash of ₩5.83b.

How Strong Is MICRO2NANO's Balance Sheet?

According to the last reported balance sheet, MICRO2NANO had liabilities of ₩5.63b due within 12 months, and liabilities of ₩17.2b due beyond 12 months. Offsetting these obligations, it had cash of ₩17.4b as well as receivables valued at ₩2.42b due within 12 months. So it has liabilities totalling ₩2.96b more than its cash and near-term receivables, combined.

Since publicly traded MICRO2NANO shares are worth a total of ₩54.6b, it seems unlikely that this level of liabilities would be a major threat. 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, MICRO2NANO also has more cash than debt, so we're pretty confident it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since MICRO2NANO 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.

View our latest analysis for MICRO2NANO

Over 12 months, MICRO2NANO reported revenue of ₩18b, which is a gain of 152%, although it did not report any earnings before interest and tax. So there's no doubt that shareholders are cheering for growth

So How Risky Is MICRO2NANO?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year MICRO2NANO had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩8.6b of cash and made a loss of ₩4.2b. However, it has net cash of ₩5.83b, so it has a bit of time before it will need more capital. The good news for shareholders is that MICRO2NANO has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. 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. We've identified 3 warning signs with MICRO2NANO (at least 1 which doesn't sit too well with us) , 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.

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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.