Would VINA TECHLtd (KOSDAQ:126340) Be Better Off With Less Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. As with many other companies VINA TECH Co.,Ltd. (KOSDAQ:126340) makes use of debt. But is this debt a concern to shareholders?

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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. If things get really bad, the lenders can take control of the business. 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 examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does VINA TECHLtd Carry?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 VINA TECHLtd had ₩88.6b of debt, an increase on ₩82.2b, over one year. However, it also had ₩9.56b in cash, and so its net debt is ₩79.0b.

How Healthy Is VINA TECHLtd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that VINA TECHLtd had liabilities of ₩65.0b due within 12 months and liabilities of ₩36.9b due beyond that. On the other hand, it had cash of ₩9.56b and ₩24.7b worth of receivables due within a year. So it has liabilities totalling ₩67.7b more than its cash and near-term receivables, combined.

VINA TECHLtd has a market capitalization of ₩296.1b, 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 VINA TECHLtd 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 VINA TECHLtd

In the last year VINA TECHLtd wasn't profitable at an EBIT level, but managed to grow its revenue by 7.2%, to ₩64b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Over the last twelve months VINA TECHLtd produced an earnings before interest and tax (EBIT) loss. Indeed, it lost ₩11b 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 ₩30b of cash over the last year. So suffice it to say we consider the stock very risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. We've identified 2 warning signs with VINA TECHLtd , 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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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.