These 4 Measures Indicate That Genic (KOSDAQ:123330) Is Using Debt Safely

Warren Buffett famously said, '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. Importantly, Genic Co., Ltd. (KOSDAQ:123330) does carry debt. But is this debt a concern to shareholders?

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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, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Genic Carry?

As you can see below, Genic had ₩5.00b of debt, at September 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has ₩11.8b in cash, leading to a ₩6.84b net cash position.

A Look At Genic's Liabilities

According to the last reported balance sheet, Genic had liabilities of ₩14.5b due within 12 months, and liabilities of ₩801.7m due beyond 12 months. Offsetting these obligations, it had cash of ₩11.8b as well as receivables valued at ₩14.1b due within 12 months. So it can boast ₩10.7b more liquid assets than total liabilities.

This short term liquidity is a sign that Genic could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Genic boasts net cash, so it's fair to say it does not have a heavy debt load!

Check out our latest analysis for Genic

Better yet, Genic grew its EBIT by 5,680% last year, which is an impressive improvement. If maintained that growth will make the debt even more manageable in the years ahead. When analysing debt levels, the balance sheet is the obvious place to start. But it is Genic's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. Genic may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last two years, Genic produced sturdy free cash flow equating to 53% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Genic has net cash of ₩6.84b, as well as more liquid assets than liabilities. And it impressed us with its EBIT growth of 5,680% over the last year. So is Genic's debt a risk? It doesn't seem so to us. 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 Genic (at least 1 which shouldn'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.