Here's Why CreoSGLtd (KOSDAQ:040350) Can Afford Some Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that CreoSG Co.,Ltd. (KOSDAQ:040350) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is CreoSGLtd's Net Debt?

You can click the graphic below for the historical numbers, but it shows that CreoSGLtd had ₩27.9b of debt in June 2025, down from ₩36.7b, one year before. However, it also had ₩11.5b in cash, and so its net debt is ₩16.4b.

A Look At CreoSGLtd's Liabilities

The latest balance sheet data shows that CreoSGLtd had liabilities of ₩4.82b due within a year, and liabilities of ₩33.7b falling due after that. Offsetting this, it had ₩11.5b in cash and ₩15.7b in receivables that were due within 12 months. So it has liabilities totalling ₩11.4b more than its cash and near-term receivables, combined.

Given CreoSGLtd has a market capitalization of ₩83.9b, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since CreoSGLtd 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.

See our latest analysis for CreoSGLtd

In the last year CreoSGLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 8.5%, to ₩8.9b. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, CreoSGLtd had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩6.8b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through ₩6.7b of cash over the last year. So suffice it to say we consider the stock very risky. 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. Be aware that CreoSGLtd is showing 5 warning signs in our investment analysis , and 4 of those make us uncomfortable...

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.