Taihan Fiber Optics (KOSDAQ:010170) Is Carrying A Fair Bit Of 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.' 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 can see that Taihan Fiber Optics Co., Ltd (KOSDAQ:010170) does use debt in its business. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 Taihan Fiber Optics's Net Debt?

The chart below, which you can click on for greater detail, shows that Taihan Fiber Optics had ₩113.7b in debt in June 2025; about the same as the year before. However, because it has a cash reserve of ₩17.4b, its net debt is less, at about ₩96.3b.

How Healthy Is Taihan Fiber Optics' Balance Sheet?

According to the last reported balance sheet, Taihan Fiber Optics had liabilities of ₩142.2b due within 12 months, and liabilities of ₩13.8b due beyond 12 months. On the other hand, it had cash of ₩17.4b and ₩29.3b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩109.3b.

Taihan Fiber Optics has a market capitalization of ₩217.9b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Taihan Fiber Optics can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Taihan Fiber Optics

In the last year Taihan Fiber Optics's revenue was pretty flat, and it made a negative EBIT. While that's not too bad, we'd prefer see growth.

Caveat Emptor

Over the last twelve months Taihan Fiber Optics produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable ₩26b at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through ₩19b of cash over the last year. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 4 warning signs with Taihan Fiber Optics , and understanding them should be part of your investment process.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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