Is MinTech (KOSDAQ:452200) Using Debt In A Risky Way?

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.' 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 can see that MinTech Co., Ltd. (KOSDAQ:452200) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

How Much Debt Does MinTech Carry?

As you can see below, MinTech had ₩11.8b of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, its balance sheet shows it holds ₩22.6b in cash, so it actually has ₩10.8b net cash.

A Look At MinTech's Liabilities

The latest balance sheet data shows that MinTech had liabilities of ₩8.77b due within a year, and liabilities of ₩11.7b falling due after that. Offsetting these obligations, it had cash of ₩22.6b as well as receivables valued at ₩1.76b due within 12 months. So it can boast ₩3.88b more liquid assets than total liabilities.

This short term liquidity is a sign that MinTech could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that MinTech has more cash than debt is arguably a good indication that 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 MinTech 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 MinTech

In the last year MinTech wasn't profitable at an EBIT level, but managed to grow its revenue by 8.9%, to ₩18b. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is MinTech?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year MinTech had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through ₩13b of cash and made a loss of ₩3.6b. However, it has net cash of ₩10.8b, so it has a bit of time before it will need more capital. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 2 warning signs with MinTech (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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.