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Here's Why Chemtros (KOSDAQ:220260) Can Afford Some Debt

Simply Wall St · 5d ago

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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Chemtros Co., Ltd. (KOSDAQ:220260) does carry debt. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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 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. 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 Chemtros Carry?

As you can see below, Chemtros had ₩22.3b of debt at September 2025, down from ₩27.7b a year prior. On the flip side, it has ₩17.4b in cash leading to net debt of about ₩4.91b.

debt-equity-history-analysis
KOSDAQ:A220260 Debt to Equity History January 6th 2026

A Look At Chemtros' Liabilities

We can see from the most recent balance sheet that Chemtros had liabilities of ₩49.9b falling due within a year, and liabilities of ₩4.55b due beyond that. On the other hand, it had cash of ₩17.4b and ₩7.92b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩29.1b.

Of course, Chemtros has a market capitalization of ₩225.2b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. 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 Chemtros 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.

See our latest analysis for Chemtros

In the last year Chemtros wasn't profitable at an EBIT level, but managed to grow its revenue by 6.0%, to ₩52b. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, Chemtros had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₩785m. 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. Another cause for caution is that is bled ₩9.0b in negative free cash flow over the last twelve months. So to be blunt we think it is risky. 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. Be aware that Chemtros is showing 4 warning signs in our investment analysis , and 2 of those are significant...

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.