Health Check: How Prudently Does ICTK (KOSDAQ:456010) 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. As with many other companies ICTK Co., Ltd. (KOSDAQ:456010) makes use of debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

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. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is ICTK's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 ICTK had ₩26.9b of debt, an increase on none, over one year. However, it does have ₩40.5b in cash offsetting this, leading to net cash of ₩13.6b.

How Healthy Is ICTK's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that ICTK had liabilities of ₩28.2b due within 12 months and liabilities of ₩1.48b due beyond that. Offsetting this, it had ₩40.5b in cash and ₩750.8m in receivables that were due within 12 months. So it can boast ₩11.6b more liquid assets than total liabilities.

This short term liquidity is a sign that ICTK could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, ICTK boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine ICTK's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for ICTK

In the last year ICTK had a loss before interest and tax, and actually shrunk its revenue by 10%, to ₩5.8b. That's not what we would hope to see.

So How Risky Is ICTK?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months ICTK lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₩6.5b and booked a ₩8.7b accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of ₩13.6b. That kitty means the company can keep spending for growth for at least two years, at current rates. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 3 warning signs for ICTK you should be aware of, and 1 of them is significant.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.