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Is Philoptics (KOSDAQ:161580) Using Debt Sensibly?

Simply Wall St · 4d 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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Philoptics Co., Ltd. (KOSDAQ:161580) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. 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, 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 Philoptics's Debt?

As you can see below, at the end of September 2025, Philoptics had ₩81.4b of debt, up from ₩67.1b a year ago. Click the image for more detail. But on the other hand it also has ₩130.3b in cash, leading to a ₩48.9b net cash position.

debt-equity-history-analysis
KOSDAQ:A161580 Debt to Equity History January 7th 2026

A Look At Philoptics' Liabilities

We can see from the most recent balance sheet that Philoptics had liabilities of ₩149.7b falling due within a year, and liabilities of ₩1.35b due beyond that. Offsetting this, it had ₩130.3b in cash and ₩3.05b in receivables that were due within 12 months. So its liabilities total ₩17.7b more than the combination of its cash and short-term receivables.

This state of affairs indicates that Philoptics' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So while it's hard to imagine that the ₩1.11t company is struggling for cash, we still think it's worth monitoring its balance sheet. While it does have liabilities worth noting, Philoptics also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is Philoptics'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.

See our latest analysis for Philoptics

Over 12 months, Philoptics made a loss at the EBIT level, and saw its revenue drop to ₩226b, which is a fall of 33%. To be frank that doesn't bode well.

So How Risky Is Philoptics?

While Philoptics lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow ₩70b. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. 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, we've discovered 2 warning signs for Philoptics (1 is concerning!) that you should be aware of before investing here.

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.