Fine M-TecLTD (KOSDAQ:441270) Is Carrying A Fair Bit Of Debt

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.' 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. As with many other companies Fine M-Tec CO.,LTD. (KOSDAQ:441270) makes use of debt. But is this debt a concern to shareholders?

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Why Does Debt Bring Risk?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is Fine M-TecLTD's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Fine M-TecLTD had ₩121.8b of debt, an increase on ₩83.1b, over one year. However, it does have ₩21.5b in cash offsetting this, leading to net debt of about ₩100.2b.

A Look At Fine M-TecLTD's Liabilities

Zooming in on the latest balance sheet data, we can see that Fine M-TecLTD had liabilities of ₩142.6b due within 12 months and liabilities of ₩56.1b due beyond that. Offsetting these obligations, it had cash of ₩21.5b as well as receivables valued at ₩39.9b due within 12 months. So it has liabilities totalling ₩137.2b more than its cash and near-term receivables, combined.

Fine M-TecLTD has a market capitalization of ₩366.1b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. 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 Fine M-TecLTD 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.

Check out our latest analysis for Fine M-TecLTD

In the last year Fine M-TecLTD had a loss before interest and tax, and actually shrunk its revenue by 37%, to ₩278b. To be frank that doesn't bode well.

Caveat Emptor

While Fine M-TecLTD's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. 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. 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 ₩47b 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. However, not all investment risk resides within the balance sheet - far from it. For example Fine M-TecLTD has 3 warning signs (and 2 which can't be ignored) we think you should know about.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.