Is Bankware Global (KOSDAQ:199480) Using Too Much Debt?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Bankware Global Co., Ltd. (KOSDAQ:199480) does carry debt. But is this debt a concern to shareholders?

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. 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, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Bankware Global's Net Debt?

As you can see below, Bankware Global had ₩3.62b of debt at March 2025, down from ₩6.05b a year prior. However, it does have ₩28.2b in cash offsetting this, leading to net cash of ₩24.5b.

How Healthy Is Bankware Global's Balance Sheet?

The latest balance sheet data shows that Bankware Global had liabilities of ₩14.7b due within a year, and liabilities of ₩17.8b falling due after that. On the other hand, it had cash of ₩28.2b and ₩2.39b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩1.94b.

Given Bankware Global has a market capitalization of ₩69.4b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Bankware Global 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 Bankware Global will need earnings to service that debt. 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 Bankware Global

In the last year Bankware Global had a loss before interest and tax, and actually shrunk its revenue by 16%, to ₩53b. That's not what we would hope to see.

So How Risky Is Bankware Global?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Bankware Global lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of ₩5.4b and booked a ₩12b accounting loss. But the saving grace is the ₩24.5b on the balance sheet. That means it could keep spending at its current rate for more than two years. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. To that end, you should learn about the 3 warning signs we've spotted with Bankware Global (including 2 which don't sit too well with us) .

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.