These 4 Measures Indicate That Synic SolutionLtd (KOSDAQ:234030) Is Using Debt Extensively

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Synic Solution Co.,Ltd. (KOSDAQ:234030) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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.

How Much Debt Does Synic SolutionLtd Carry?

The chart below, which you can click on for greater detail, shows that Synic SolutionLtd had ₩14.2b in debt in September 2025; about the same as the year before. But on the other hand it also has ₩29.0b in cash, leading to a ₩14.8b net cash position.

How Healthy Is Synic SolutionLtd's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Synic SolutionLtd had liabilities of ₩26.7b due within 12 months and liabilities of ₩3.76b due beyond that. Offsetting these obligations, it had cash of ₩29.0b as well as receivables valued at ₩15.8b due within 12 months. So it can boast ₩14.3b more liquid assets than total liabilities.

This surplus suggests that Synic SolutionLtd has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Synic SolutionLtd has more cash than debt is arguably a good indication that it can manage its debt safely.

Check out our latest analysis for Synic SolutionLtd

It is just as well that Synic SolutionLtd's load is not too heavy, because its EBIT was down 59% over the last year. Falling earnings (if the trend continues) could eventually make even modest debt quite risky. When analysing debt levels, the balance sheet is the obvious place to start. But you can't view debt in total isolation; since Synic SolutionLtd 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While Synic SolutionLtd has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last two years, Synic SolutionLtd burned a lot of cash. While that may be a result of expenditure for growth, it does make the debt far more risky.

Summing Up

While we empathize with investors who find debt concerning, you should keep in mind that Synic SolutionLtd has net cash of ₩14.8b, as well as more liquid assets than liabilities. So while Synic SolutionLtd does not have a great balance sheet, it's certainly not too bad. 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. For instance, we've identified 4 warning signs for Synic SolutionLtd (3 are a bit unpleasant) you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.