Kornic Automation (KOSDAQ:391710) 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 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. As with many other companies Kornic Automation Co., Ltd. (KOSDAQ:391710) makes use of debt. But should shareholders be worried about its use of debt?

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

What Risk Does Debt Bring?

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. 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. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Kornic Automation Carry?

As you can see below, at the end of June 2025, Kornic Automation had ₩8.13b of debt, up from ₩426.4m a year ago. Click the image for more detail. But on the other hand it also has ₩18.1b in cash, leading to a ₩10.0b net cash position.

How Healthy Is Kornic Automation's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Kornic Automation had liabilities of ₩8.84b due within 12 months and liabilities of ₩14.3b due beyond that. On the other hand, it had cash of ₩18.1b and ₩5.65b worth of receivables due within a year. So it can boast ₩647.6m more liquid assets than total liabilities.

This state of affairs indicates that Kornic Automation's balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the ₩82.9b company is short on cash, but still worth keeping an eye on the balance sheet. Simply put, the fact that Kornic Automation has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But it is Kornic Automation'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.

See our latest analysis for Kornic Automation

Over 12 months, Kornic Automation made a loss at the EBIT level, and saw its revenue drop to ₩35b, which is a fall of 32%. To be frank that doesn't bode well.

So How Risky Is Kornic Automation?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Kornic Automation had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩829m of cash and made a loss of ₩1.4b. Given it only has net cash of ₩10.0b, the company may need to raise more capital if it doesn't reach break-even soon. 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. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 2 warning signs with Kornic Automation , and understanding them should be part of your investment process.

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.

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.