ISAAC EngineeringLtd (KOSDAQ:351330) Has Debt But No Earnings; Should You Worry?

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. We note that ISAAC Engineering Co.,Ltd (KOSDAQ:351330) does have debt on its balance sheet. But is this debt a concern to shareholders?

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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. 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. 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 ISAAC EngineeringLtd's Debt?

The image below, which you can click on for greater detail, shows that at September 2025 ISAAC EngineeringLtd had debt of ₩19.8b, up from ₩4.86b in one year. But it also has ₩23.1b in cash to offset that, meaning it has ₩3.28b net cash.

A Look At ISAAC EngineeringLtd's Liabilities

According to the last reported balance sheet, ISAAC EngineeringLtd had liabilities of ₩31.1b due within 12 months, and liabilities of ₩8.12b due beyond 12 months. Offsetting these obligations, it had cash of ₩23.1b as well as receivables valued at ₩12.6b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩3.44b.

Since publicly traded ISAAC EngineeringLtd shares are worth a total of ₩69.9b, 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, ISAAC EngineeringLtd also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since ISAAC EngineeringLtd 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 ISAAC EngineeringLtd

Over 12 months, ISAAC EngineeringLtd reported revenue of ₩79b, which is a gain of 4.1%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is ISAAC EngineeringLtd?

While ISAAC EngineeringLtd lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow ₩1.4b. 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. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. 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. To that end, you should learn about the 3 warning signs we've spotted with ISAAC EngineeringLtd (including 1 which is a bit unpleasant) .

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.

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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.