Does Sejong Telecom (KOSDAQ:036630) Have A Healthy Balance Sheet?

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.' 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. We can see that Sejong Telecom, Inc. (KOSDAQ:036630) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Sejong Telecom's Net Debt?

As you can see below, Sejong Telecom had ₩78.2b of debt at September 2025, down from ₩126.3b a year prior. However, it does have ₩76.0b in cash offsetting this, leading to net debt of about ₩2.18b.

A Look At Sejong Telecom's Liabilities

We can see from the most recent balance sheet that Sejong Telecom had liabilities of ₩86.9b falling due within a year, and liabilities of ₩96.0b due beyond that. Offsetting these obligations, it had cash of ₩76.0b as well as receivables valued at ₩59.6b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩47.3b.

This deficit isn't so bad because Sejong Telecom is worth ₩145.4b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Carrying virtually no net debt, Sejong Telecom has a very light debt load indeed. There's no doubt that we learn most about debt from the balance sheet. But you can't view debt in total isolation; since Sejong Telecom 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 Sejong Telecom

Over 12 months, Sejong Telecom made a loss at the EBIT level, and saw its revenue drop to ₩310b, which is a fall of 17%. That's not what we would hope to see.

Caveat Emptor

Not only did Sejong Telecom's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at ₩11b. 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 ₩27b of cash over the last year. 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. For example Sejong Telecom has 3 warning signs (and 2 which make us uncomfortable) we think 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.