Some state volatility, rather than debt, is the best way to consider about risk as an investor, but Warren Buffett famously stated that ‘Volatility is far from synonymous with risk.’ 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. As with many other companies NBT Inc. (KOSDAQ:236810) builds utilize of debt. But should shareholders be worried about its utilize of debt?
When Is Debt A Problem?
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. 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. The first thing to do when considering how much debt a business utilizes is to view at its cash and debt toobtainher.
How Much Debt Does NBT Carry?
You can click the graphic below for the historical numbers, but it displays that as of June 2025 NBT had ₩27.6b of debt, an increase on ₩24.1b, over one year. However, it does have ₩14.2b in cash offsetting this, leading to net debt of about ₩13.4b.
How Strong Is NBT’s Balance Sheet?
According to the last reported balance sheet, NBT had liabilities of ₩26.2b due within 12 months, and liabilities of ₩22.0b due beyond 12 months. On the other hand, it had cash of ₩14.2b and ₩8.53b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by ₩25.4b.
While this might seem like a lot, it is not so bad since NBT has a market capitalization of ₩58.4b, and so it could probably strengthen its balance sheet by raising capital if it necessaryed to. However, it is still worthwhile taking a close view at its ability to pay off debt. There’s no doubt that we learn most about debt from the balance sheet. But you can’t view debt in total isolation; since NBT will necessary earnings to service that debt. So when considering debt, it’s definitely worth viewing at the earnings trfinish. Click here for an interactive snapshot.
View our latest analysis for NBT
In the last year NBT had a loss before interest and tax, and actually shrunk its revenue by 4.6%, to ₩100b. We would much prefer see growth.
Caveat Emptor
Importantly, NBT had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost ₩5.2b at the EBIT level. When we view 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 consider its balance sheet is a little strained, though not beyond repair. Another cautilize for caution is that is bled ₩328m in negative free cash flow over the last twelve months. So suffice it to state we do consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet – far from it. These risks can be hard to spot. Every company has them, and we’ve spotted 3 warning signs for NBT (of which 2 are concerning!) you should know about.
Of course, if you’re the type of investor who prefers acquireing stocks without the burden of debt, then don’t hesitate to discover our exclusive list of net cash growth stocks, today.
Valuation is complex, but we’re here to simplify it.
Discover if NBT might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividfinishs, insider trades, and its financial condition.
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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 applying an unbiased methodology and our articles are not intfinished to be financial advice. It does not constitute a recommfinishation to acquire or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized 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.
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