Is HUMAN TECHNOLOGY (KOSDAQ:175140) Using Debt Sensibly?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 note that HUMAN TECHNOLOGY Co., Ltd (KOSDAQ:175140) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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 HUMAN TECHNOLOGY Carry?

As you can see below, HUMAN TECHNOLOGY had ₩8.46b of debt at September 2025, down from ₩12.3b a year prior. However, it does have ₩8.90b in cash offsetting this, leading to net cash of ₩444.1m.

A Look At HUMAN TECHNOLOGY's Liabilities

The latest balance sheet data shows that HUMAN TECHNOLOGY had liabilities of ₩21.6b due within a year, and liabilities of ₩2.11b falling due after that. Offsetting these obligations, it had cash of ₩8.90b as well as receivables valued at ₩5.33b due within 12 months. So it has liabilities totalling ₩9.42b more than its cash and near-term receivables, combined.

Of course, HUMAN TECHNOLOGY has a market capitalization of ₩104.6b, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, HUMAN TECHNOLOGY also has more cash than debt, so we're pretty confident it can manage its debt safely. 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 HUMAN TECHNOLOGY 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 HUMAN TECHNOLOGY

In the last year HUMAN TECHNOLOGY wasn't profitable at an EBIT level, but managed to grow its revenue by 3.4%, to ₩49b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is HUMAN TECHNOLOGY?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year HUMAN TECHNOLOGY had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of ₩13b and booked a ₩25b accounting loss. Given it only has net cash of ₩444.1m, the company may need to raise more capital if it doesn't reach break-even soon. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. 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. To that end, you should learn about the 4 warning signs we've spotted with HUMAN TECHNOLOGY (including 2 which make us uncomfortable) .

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.