Innowireless (KOSDAQ:073490) Seems To Use Debt Rather Sparingly

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. Importantly, Innowireless Co., Ltd. (KOSDAQ:073490) does carry debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, 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 Innowireless Carry?

As you can see below, Innowireless had ₩16.1b of debt at June 2025, down from ₩27.7b a year prior. However, it does have ₩59.6b in cash offsetting this, leading to net cash of ₩43.5b.

How Strong Is Innowireless' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Innowireless had liabilities of ₩44.8b due within 12 months and liabilities of ₩6.09b due beyond that. Offsetting these obligations, it had cash of ₩59.6b as well as receivables valued at ₩29.8b due within 12 months. So it can boast ₩38.5b more liquid assets than total liabilities.

This surplus suggests that Innowireless is using debt in a way that is appears to be both safe and conservative. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Succinctly put, Innowireless boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Innowireless

Even more impressive was the fact that Innowireless grew its EBIT by 268% over twelve months. If maintained that growth will make the debt even more manageable in the years ahead. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Innowireless'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.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While Innowireless has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the last three years, Innowireless recorded free cash flow worth a fulsome 83% of its EBIT, which is stronger than we'd usually expect. That positions it well to pay down debt if desirable to do so.

Summing Up

While it is always sensible to investigate a company's debt, in this case Innowireless has ₩43.5b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of ₩6.7b, being 83% of its EBIT. The bottom line is that we do not find Innowireless's debt levels at all concerning. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example - Innowireless has 1 warning sign we think you should be aware of.

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.