Is NuintekLtd (KOSDAQ:012340) Using Debt Sensibly?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that Nuintek Co.,Ltd. (KOSDAQ:012340) does use debt in its business. But the more important question is: how much risk is that debt creating?

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is NuintekLtd's Debt?

As you can see below, NuintekLtd had ₩27.3b of debt at September 2025, down from ₩28.5b a year prior. However, it also had ₩1.67b in cash, and so its net debt is ₩25.6b.

How Healthy Is NuintekLtd's Balance Sheet?

According to the last reported balance sheet, NuintekLtd had liabilities of ₩48.7b due within 12 months, and liabilities of ₩9.84b due beyond 12 months. On the other hand, it had cash of ₩1.67b and ₩14.3b worth of receivables due within a year. So its liabilities total ₩42.6b more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the ₩26.9b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. At the end of the day, NuintekLtd would probably need a major re-capitalization if its creditors were to demand repayment. 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 NuintekLtd 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 NuintekLtd

In the last year NuintekLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 6.5%, to ₩82b. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, NuintekLtd had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping ₩5.2b. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. For example, we would not want to see a repeat of last year's loss of ₩6.6b. And until that time we think this is a risky stock. 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. Be aware that NuintekLtd is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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.