Korea Circuit (KRX:007810) Is Carrying A Fair Bit Of Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 Korea Circuit Co., Ltd. (KRX:007810) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

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 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, 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.

What Is Korea Circuit's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Korea Circuit had ₩284.7b of debt, an increase on ₩272.7b, over one year. However, it does have ₩207.7b in cash offsetting this, leading to net debt of about ₩77.0b.

How Healthy Is Korea Circuit's Balance Sheet?

We can see from the most recent balance sheet that Korea Circuit had liabilities of ₩292.0b falling due within a year, and liabilities of ₩236.5b due beyond that. Offsetting these obligations, it had cash of ₩207.7b as well as receivables valued at ₩215.3b due within 12 months. So its liabilities total ₩105.5b more than the combination of its cash and short-term receivables.

Since publicly traded Korea Circuit shares are worth a total of ₩566.6b, 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. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Korea Circuit's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for Korea Circuit

Over 12 months, Korea Circuit made a loss at the EBIT level, and saw its revenue drop to ₩1.4t, which is a fall of 2.2%. That's not what we would hope to see.

Caveat Emptor

Over the last twelve months Korea Circuit produced an earnings before interest and tax (EBIT) loss. Indeed, it lost ₩15b 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. We would feel better if it turned its trailing twelve month loss of ₩87b into a profit. So in short it's a really risky stock. 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. Be aware that Korea Circuit is showing 1 warning sign in our investment analysis , you should know about...

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.