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We Think UniTest Incorporation (KOSDAQ:086390) Has A Fair Chunk Of Debt

Simply Wall St · 01/08 22:42

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' 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. We can see that UniTest Incorporation (KOSDAQ:086390) does use debt in its business. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is UniTest Incorporation's Debt?

The image below, which you can click on for greater detail, shows that at September 2025 UniTest Incorporation had debt of ₩40.4b, up from ₩17.2b in one year. On the flip side, it has ₩30.3b in cash leading to net debt of about ₩10.0b.

debt-equity-history-analysis
KOSDAQ:A086390 Debt to Equity History January 8th 2026

A Look At UniTest Incorporation's Liabilities

We can see from the most recent balance sheet that UniTest Incorporation had liabilities of ₩47.7b falling due within a year, and liabilities of ₩30.4b due beyond that. On the other hand, it had cash of ₩30.3b and ₩44.1b worth of receivables due within a year. So its liabilities total ₩3.78b more than the combination of its cash and short-term receivables.

This state of affairs indicates that UniTest Incorporation's 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 ₩248.5b company is struggling for cash, we still think it's worth monitoring its balance sheet. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine UniTest Incorporation's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for UniTest Incorporation

Over 12 months, UniTest Incorporation reported revenue of ₩120b, which is a gain of 64%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

Caveat Emptor

Despite the top line growth, UniTest Incorporation still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩18b at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled ₩29b in negative free cash flow over the last twelve months. So in short it's a really risky stock. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 2 warning signs for UniTest Incorporation that you should be aware of before investing here.

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.