Is Sensorview (KOSDAQ:321370) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We can see that Sensorview Co., LTD (KOSDAQ:321370) does use debt in its business. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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. If things get really bad, the lenders can take control of the business. 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.

What Is Sensorview's Net Debt?

The chart below, which you can click on for greater detail, shows that Sensorview had ₩13.6b in debt in March 2025; about the same as the year before. However, it also had ₩8.59b in cash, and so its net debt is ₩5.06b.

A Look At Sensorview's Liabilities

According to the last reported balance sheet, Sensorview had liabilities of ₩7.93b due within 12 months, and liabilities of ₩13.3b due beyond 12 months. On the other hand, it had cash of ₩8.59b and ₩2.98b worth of receivables due within a year. So it has liabilities totalling ₩9.65b more than its cash and near-term receivables, combined.

Since publicly traded Sensorview shares are worth a total of ₩59.9b, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Sensorview 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.

See our latest analysis for Sensorview

In the last year Sensorview wasn't profitable at an EBIT level, but managed to grow its revenue by 70%, to ₩17b. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Sensorview still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable ₩14b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through ₩24b of cash over the last year. So suffice it to say we consider the stock very risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 4 warning signs for Sensorview you should be aware of, and 3 of them shouldn't be ignored.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.