Does Insung Information (KOSDAQ:033230) 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. Importantly, Insung Information Co., Ltd (KOSDAQ:033230) does carry debt. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Insung Information Carry?

The image below, which you can click on for greater detail, shows that Insung Information had debt of ₩22.6b at the end of June 2025, a reduction from ₩46.9b over a year. But on the other hand it also has ₩35.9b in cash, leading to a ₩13.2b net cash position.

How Strong Is Insung Information's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Insung Information had liabilities of ₩105.7b due within 12 months and liabilities of ₩14.9b due beyond that. On the other hand, it had cash of ₩35.9b and ₩52.9b worth of receivables due within a year. So its liabilities total ₩31.9b more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Insung Information has a market capitalization of ₩102.0b, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt. Despite its noteworthy liabilities, Insung Information 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 Insung Information's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Insung Information

Over 12 months, Insung Information made a loss at the EBIT level, and saw its revenue drop to ₩338b, which is a fall of 6.5%. We would much prefer see growth.

So How Risky Is Insung Information?

Although Insung Information had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of ₩17b. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. Until we see some positive EBIT, we're a bit cautious of the stock, not least because of the rather modest revenue growth. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 2 warning signs for Insung Information you should be aware of, and 1 of them can't be ignored.

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.