WEBULL

Health Check: How Prudently Does Fine DNC (KOSDAQ:049120) Use Debt?

Simply Wall St · 1d ago

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. Importantly, Fine DNC Co., Ltd. (KOSDAQ:049120) does carry debt. But should shareholders be worried about its use of debt?

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Fine DNC's Debt?

You can click the graphic below for the historical numbers, but it shows that Fine DNC had ₩32.7b of debt in September 2025, down from ₩40.2b, one year before. However, it does have ₩3.01b in cash offsetting this, leading to net debt of about ₩29.7b.

debt-equity-history-analysis
KOSDAQ:A049120 Debt to Equity History December 3rd 2025

How Healthy Is Fine DNC's Balance Sheet?

The latest balance sheet data shows that Fine DNC had liabilities of ₩42.8b due within a year, and liabilities of ₩10.2b falling due after that. On the other hand, it had cash of ₩3.01b and ₩8.39b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩41.7b.

This deficit is considerable relative to its market capitalization of ₩44.1b, so it does suggest shareholders should keep an eye on Fine DNC's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Fine DNC's earnings that will influence how the balance sheet holds up in the future. 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.

View our latest analysis for Fine DNC

In the last year Fine DNC wasn't profitable at an EBIT level, but managed to grow its revenue by 12%, to ₩72b. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Fine DNC had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩645m. 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. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through ₩5.9b of cash over the last year. So in short it's a really risky stock. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Fine DNC (of which 1 is significant!) you should know about.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.