Is Eco VoltLtd (KOSDAQ:097780) Weighed On By Its Debt Load?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. Importantly, Eco Volt Co.,Ltd. (KOSDAQ:097780) does carry debt. But should shareholders be worried about its use of debt?

Our free stock report includes 2 warning signs investors should be aware of before investing in Eco VoltLtd. Read for free now.

What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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.

How Much Debt Does Eco VoltLtd Carry?

As you can see below, Eco VoltLtd had ₩7.11b of debt at March 2025, down from ₩16.9b a year prior. However, its balance sheet shows it holds ₩73.7b in cash, so it actually has ₩66.6b net cash.

A Look At Eco VoltLtd's Liabilities

The latest balance sheet data shows that Eco VoltLtd had liabilities of ₩43.9b due within a year, and liabilities of ₩1.33b falling due after that. Offsetting this, it had ₩73.7b in cash and ₩33.1b in receivables that were due within 12 months. So it actually has ₩61.7b more liquid assets than total liabilities.

This surplus liquidity suggests that Eco VoltLtd's balance sheet could take a hit just as well as Homer Simpson's head can take a punch. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Simply put, the fact that Eco VoltLtd 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 you can't view debt in total isolation; since Eco VoltLtd will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

View our latest analysis for Eco VoltLtd

Over 12 months, Eco VoltLtd reported revenue of ₩222b, which is a gain of 21%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

So How Risky Is Eco VoltLtd?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Eco VoltLtd had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through ₩12b of cash and made a loss of ₩17b. While this does make the company a bit risky, it's important to remember it has net cash of ₩66.6b. That means it could keep spending at its current rate for more than two years. With very solid revenue growth in the last year, Eco VoltLtd may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. 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 instance, we've identified 2 warning signs for Eco VoltLtd (1 is concerning) you should be aware of.

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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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.